We used mouse embryonic stem (ES) cells to study globin gene expression and switching in vitro. We show that ES-derived embryoid bodies express the full complement of mouse embryonic globin genes in the correct temporal order and that on further differentiation, a switch occurs to the fetal/adult genes. In addition, the erythroid-specific transcription factor NF-E1 was shown to be expressed coordinately with that of globin in embryoid bodies. We conclude from these experiments that the ES cell system provides a good model to study hematopoietic development. When the human epsilon- or beta-globin genes driven by the dominant control region (DCR) are introduced into this system, the human epsilon-globin gene, in contrast to the beta-globin gene, is not deregulated by the presence of the DCR and is expressed strictly as an embryonic gene. We conclude from this that the epsilon-globin gene is not regulated by competition with other genes in the human beta-globin locus.