Summary: Human pluripotent stem cells (hPSCs) generate hematopoietic progenitor cells (HPCs) but fail to engraft xenograft models used to detect adult/somatic hematopoietic stem cells (HSCs) from donors. Recent progress to derive hPSC-derived HSCs has relied on cell-autonomous forced expression of transcription factors; however, the relationship of bone marrow to transplanted cells remains unknown. Here, we quantified a failure of hPSC-HPCs to survive even 24 hr post transplantation. Across several hPSC-HPC differentiation methodologies, we identified the lack of CXCR4 expression and function. Ectopic CXCR4 conferred CXCL12 ligand-dependent signaling of hPSC-HPCs in biochemical assays and increased migration/chemotaxis, hematopoietic progenitor capacity, and survival and proliferation following in vivo transplantation. This was accompanied by a transcriptional shift of hPSC-HPCs toward somatic/adult sources, but this approach failed to produce long-term HSC xenograft reconstitution. Our results reveal that networks involving CXCR4 should be targeted to generate putative HSCs with in vivo function from hPSCs. : Bhatia and colleagues reveal that human PSC-derived hematopoietic progenitor cells fail to survive even 24 hr following in vivo bone marrow transplantation, while these same progenitors survive and proliferate for weeks in vitro. They link these observations to deficiencies in CXCR4 signaling, which, when rectified, lead to enhanced progenitor function and survival in the bone marrow and a transcriptional shift toward somatic hematopoietic stem cells gene profiles. Keywords: human pluripotent, hematopoietic stem cells, progenitors, bone marrow, transplantation, chemokine receptor, cell signaling