Embryonic stem cells (ESCs) have an amazing potential, in that they can be used to generate any cell in the adult human body. The difficulty has been in translating this theoretical potential to practical, clinically relevant therapies. The goal of my work is to identify key immune barriers to embryonic stem cell derived hematopoietic progenitors (ES-HPs) after transplantation. Understanding the mechanisms of this rejection will also be used to improve ES-HP engraftment after transplantation. Cells derived from ESCs, including ES-HPs are often difficult to find, even shortly after transplantation. To determine potential mechanisms of immunogenicity, we compared development and immunogenicity markers on ES-HPs derived using the embryoid body method and coculture on the bone marrow stromal cell line OP9 and compared these to both adult and fetal tissues. From those results we tested the functional immunogenicity of ES-HPs in vitro using mixed lymphocyte reactions, phagocytosis assays, and an antigen presenting cell assay. We transplanted ES-HPs into NSG mice lacking B, T and NK cells to test interactions with host macrophages. To test directly if macrophages were a barrier to ES-HPs, we depleted mice of macrophages with clodronate loaded liposomes prior to transplantation. We found that using the OP9 method generated ES-HPs at day 16, resembled those found in late fetal development through adult bone marrow stages. As our ES-HPs matured they expressed MHC-I, but not MHC-II. The expression of costimulatory molecules CD80 and CD86 was temporally dependent on ES-HPs. NK activating ligands were not expressed on ES-HPs. Macrophages inhibitory ligands CD47 and CD200 had low to no expression on ES-HPs. In vitro assays of day 16 ES-HPs from the OP9 method revealed they could stimulate T cells in the context of F4/80+ macrophages and that this stimulation was dependent on host MHC-II. Macrophages preferentially phagocytosed ESCs and ES-HPs compared to lineage negative bone marrow. After in vivo transplantation into NSG mice, ES-HPs achieved a low level of chimerism. However, there was an increase in weight in comparison to untransplanted NSG and bone marrow transplanted controls. This increase could not be accounted for by contributions of ES-HP derived cells. Instead we found a significant increase in host F4/80+ macrophages. Depletion of macrophages improved chimerism of ES-HPs in the spleen and we also observed an increase in chimerism in the bone marrow, but it did not reach statistical significance. From our work, we can conclude that 1) ES-HPs interact with the adult host immune system, 2) ES-HP transplantation increases the number of host derived F4/80+ macrophages in the spleen and 3) Host F4/80 macrophages preferentially phagocytose ES-HPs compared to lineage negative bone marrow. This suggests that macrophages are a barrier to ES-HP engraftment in adult host. This mechanism through which ES-HPs are rejected is distinct from the mechanisms that reject adult bone marrow. Importantly, this research could provide clues about how stem cell and fetal cell populations interact with the adult immune system and could lead to conditioning therapies appropriate for these unique rejection mechanisms. Consequently, this research could therefore improve the therapeutic potential of stem cell therapies for use in regenerative medicine.