Transfusion of donor-derived platelets is commonly used for thrombocytopenia, which results from a variety of clinical conditions and relies on a constant donor supply due to the limited shelf life of these cells. Embryonic stem (ES) and induced pluripotent stem (iPS) cells represent a potential source of megakaryocytes and platelets for transfusion therapies; however, the majority of current ES/iPS cell differentiation protocols are limited by low yields of hematopoietic progeny. In both mice and humans, mutations in the gene-encoding transcription factor GATA1 cause an accumulation of proliferating, developmentally arrested megakaryocytes, suggesting that GATA1 suppression in ES and iPS cell–derived hematopoietic progenitors may enhance megakaryocyte production. Here, we engineered ES cells from WT mice to express a doxycycline-regulated (dox-regulated) shRNA that targets Gata1 transcripts for degradation. Differentiation of these cells in the presence of dox and thrombopoietin (TPO) resulted in an exponential (at least 1013-fold) expansion of immature hematopoietic progenitors. Dox withdrawal in combination with multilineage cytokines restored GATA1 expression, resulting in differentiation into erythroblasts and megakaryocytes. Following transfusion into recipient animals, these dox-deprived mature megakaryocytes generated functional platelets. Our findings provide a readily reproducible strategy to exponentially expand ES cell–derived megakaryocyte-erythroid progenitors that have the capacity to differentiate into functional platelet-producing megakaryocytes.