Cell stressors, such as elevated levels of reactive oxygen species (ROS), adversely affect hematopoietic stem cell (HSC) reconstituting ability. However, the effects of ROS have not been evaluated in the context of hematopoietic development from human pluripotent stem cells (hPSCs). Using our previously described in vitro system for efficient derivation of hematopoietic cells from hPSCs, we show that the vast majority of generated hematopoietic cells display supraphysiological levels of ROS compared to fresh cord blood cells. Elevated ROS resulted in DNA damage of the CD34 hematopoietic fraction and, following functional assays, reduced colony formation and impaired proliferative capacity. Interestingly, all the proliferative potential of the most primitive hematopoietic cells was limited to a small fraction with low ROS levels. We show that elevation of ROS in hPSC-derived hematopoietic cells is contributed by multiple distinct cellular processes. Furthermore, by targeting these molecular processes with 4 unique factors, we could reduce ROS levels significantly, yielding a 22-fold increase in the most primitive CD90 CD34 hematopoietic cells with robust growth capacity. We demonstrate that the ROS reducing factors specifically reduced ROS in more primitive hematopoietic fractions, in contrast to endothelial cells that maintained low ROS levels in the cultures. We conclude that high levels of ROS in in vitro differentiation systems of hPSCs is a major determinant in the lack of ability to generate hematopoietic cells with similar proliferation/differentiation potential to in vivo hematopoietic progenitors, and suggest that elevated ROS is a significant barrier to generating hPSC-derived repopulating HSCs. Stem Cells 2017;35:197-206.