At early stages of vertebrate ontogeny, blood and endothelial cells develop from a common mesodermal progenitor, the haemangioblast. Upon haematopoietic commitment, the haemangioblast generates blood precursors through populations of endothelial cells with haemogenic properties. Although several transcription factors have been implicated in haemangioblast differentiation, the precise mechanisms governing cell fate decisions towards the generation of haemogenic endothelium precursors remain largely unknown. Under defined conditions, embryonic stem (ES) cells can be differentiated into haemangioblast-like progenitors that faithfully recapitulate early embryonic haematopoiesis. Here, we made use of mouse ES cells as a model system to understand the role of SOX7, a member of a large family of transcription factors involved in a wide range of developmental processes. During haemangioblast differentiation, SOX7 is expressed in haemogenic endothelium cells and is downregulated in nascent blood precursors. Gain-of-function assays revealed that the enforced expression of Sox7 in haemangioblast-derived blast colonies blocks further differentiation and sustains the expression of endothelial markers. Thus, to explore the transcriptional activity of SOX7, we focused on the endothelial-specific adhesion molecule VE-cadherin. Similar to SOX7, VE-cadherin is expressed in haemogenic endothelium and is downregulated during blood cell formation. We show that SOX7 binds and activates the promoter of VE-cadherin, demonstrating that this gene is a novel downstream transcriptional target of SOX7. Altogether, our findings suggest that SOX7 is involved in the transcriptional regulation of genes expressed in the haemogenic endothelium and provide new clues to decipher the molecular pathways that drive early embryonic haematopoiesis.