In recent years, much progress has been made in understanding the processes of blood cell formation (haemopoiesis) and the latest developments are described in this chapter. Haemopoiesis begins in early embryonic stages. The sites of formation vary as the embryo develops, but when the first bones are produced, haematopoiesis establishes in the bone marrow. The bone marrow is a highly vascularised connective tissue that contains the haematopoietic cells. All adult blood cells are produced from the same lineage, originating from a haematopoietic stem cell. From this cell, derivatives are produced and differentiate to form the various blood cell types. This chapter describes in detail the processes of blood cell formation and blood cell precursors.