Delineating the mechanism or mechanisms that regulate the specification of hemogenic endothelial cells from primordial endothelium is critical for optimizing their derivation from human stem cells for clinical therapies. We previously determined that retinoic acid (RA) is required for hemogenic specification, as well as cell-cycle control, of endothelium during embryogenesis. Herein, we define the molecular signals downstream of RA that regulate hemogenic endothelial cell development and demonstrate that cell-cycle control is required for this process. We found that re-expression of c-Kit in RA-deficient (Raldh2^−/−) primordial endothelium induced Notch signaling and p27 expression, which restored cell-cycle control and rescued hemogenic endothelial cell specification and function. Re-expression of p27 in RA-deficient and Notch-inactivated primordial endothelial cells was sufficient to correct their defects in cell-cycle regulation and hemogenic endothelial cell development. Thus, RA regulation of hemogenic endothelial cell specification requires c-Kit, notch signaling, and p27-mediated cell-cycle control.