Recent investigations have indicated that hematopoietic stem cells (HSCs) have the potential to differentiate into multiple non-blood cell lineages and contribute to the cellular regeneration of various tissues and multiple organs. Most studies to date on HSC potential have examined the adult, focusing on their potential to repair tissue under pathological conditions (e.g., ischemic injury, organ failure). Comparatively little is known about the physiological role of HSCs in normal tissue homeostasis in the adult, and even less of their contribution to organogenesis during prenatal development. This study reports the contribution of blood-borne cells to various organ systems of the developing embryo using a quail-chick parabiosis model. Under these conditions, the developing circulatory systems fuse between ED6-ED8, resulting in free exchange of circulating cells. Cells of quail origin, identified by quail-specific antibodies at ED15, were found in numerous organs of the parabiotic chick embryo. Circulating cells contributed to developing vasculature, where they differentiated into endothelial, smooth muscle, and adventitial tissues. In the heart, differentiation of circulating cells into cardiomyocytes was demonstrated using double immunolabeling for QCPN and sarcomeric actin or myosin. These results were confirmed by intramyocardial injection of quail bone marrow cells that were found to express markers of myocytes, coronary smooth muscle, and epicardium. Experiments using lacZ-transgenic chick embryos for a second positive cellular marker showed that fusion between chick and quail cells was a rare event. These results suggest that during development, multipotent cells are present in the embryonic circulation and home into different organs where they undergo tissue-specific differentiation. Moreover, the demonstration that blood-borne cells contribute to the development of various organs lends credence to claims that hematopoietic stem cells have utility for treating diseased or damaged tissues in the adult.