Differentiation of human pluripotent stem cells (hPSCs) into functional cell types is a crucial step in cell therapy. In the present study, we demonstrate that functional CD34(+) progenitor cells can be efficiently produced from human embryonic stem cells (hESCs) and induced pluripotent stem cells (hiPSCs) by combined modulation of 2 signaling pathways. A higher proportion of CD34(+) cells (∼ 20%) could be derived from hPSCs by inhibition of mitogen-activated protein kinase (MAPK) extracellular signal-regulated protein kinase (MEK)/extracellular signal-regulated kinase (ERK) signaling and activation of bone morphogenic protein-4 (BMP4) signaling. hPSC-derived CD34(+) progenitor cells further developed to endothelial and smooth muscle cells with functionality. Moreover, they contributed directly to neovasculogenesis in ischemic mouse hind limbs, thereby resulting in improved blood perfusion and limb salvage. Our results suggest that combined modulation of signaling pathways may be an efficient means of differentiating hPSCs into functional CD34(+) progenitor cells.