Blood transfusion is a mainstay of modern clinical medicine. However, a number of fundamental problems persist, including insufficiency of supply, the threat of transfusion transmissible infectious disease and the problem of immune incompatibility. It would be extremely valuable, therefore, to develop a potentially limitless, infection free, immune neutral source of erythrocytes for transfusion. Human embryonic stem cells (hESC), have potentially limitless proliferative capacity and the potential to differentiate into the majority of adult cell types including erythrocytes. A number of barriers to the development of clinical cellular therapeutics from hESC have been posited, including HLA incompatibility between donor and recipient, difficulties in defining optimal cell phenotype and function in vitro and the fact that most tissues consist of complex three-dimensional matrices of cells. Many or most of these problems are circumvented in the generation of erythrocytes and group O RhD negative Kell negative blood would be compatible with the majority of recipients. Red cell transfusion is therefore an attractive goal for pluripotent stem cell derived therapeutics. Much progress has been made however, a number of challenges remain including scale up, ensuring clinical effectiveness and product safety.