Transforming growth factor β (TGFβ) plays an important role in development and maintenance of murine yolk sac vascular development. Targeted deletions of Tgfb1 and other components of this signaling pathway, such as Acvrl1, Tgfbr1 and Tgfbr2, result in abnormal vascular development especially of the yolk sac, leading to embryonic lethality. There are significant differences between murine and primate development that limit interpretation of studies from mouse models. Thus, to examine the role of TGFβ in early human vascular development we used the model of differentiating human embryonic stem cell-derived embryoid bodies to recapitulate early stages of embryonic development. TGFβ was applied for different time frames after initiation of embryoid body cultures to assess its effect on differentiation. TGFβ inhibited the expression of endodermal, endothelial and hematopoietic markers, which contrasts with findings in the mouse in which TGFβ reduced the level of endodermal markers but increased endothelial marker expression. The inhibition observed was not due to changes in proliferation or apoptosis. This marked contrast between the two species may reflect the different origins of the yolk sac hemangiogenic lineages in mouse and human. TGFβ effects on the hypoblast, from which these cell lineages are derived in human, would decrease subsequent differentiation of hematopoietic, endothelial and endodermal cells. By contrast, TGFβ action on murine hypoblast, while affecting endoderm would not affect the hemangiogenic lineages that are epiblast-derived in the mouse. This study highlights important differences between early human and mouse embryonic development and suggests a role of TGFβ in human hypoblast differentiation.