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Shwachman–Diamond syndrome (SDS) is an inherited bone marrow failure disorder that often presents at infancy. Progress has been made in revealing causal mutated genes (SBDS and others), ribosome defects, and hematopoietic aberrations in SDS. However, the mechanism underlying the hematopoietic failure remained unknown, and treatment options are limited. Herein, we investigated the onset of SDS embryonic hematopoietic impairments. We generated SDS and control human‐derived induced pluripotent stem cells (iPSCs). SDS iPSCs recapitulated the SDS hematological phenotype. Detailed stepwise evaluation of definitive hematopoiesis revealed defects that started at the early emerging hematopoietic progenitor (EHP) stage after mesoderm and hemogenic endothelium were normally induced. Hematopoietic potential of EHPs was markedly reduced, and the introduction of SBDS in SDS iPSCs improved colony formation. Transcriptome analysis revealed reduced expression of ribosome and oxidative phosphorylation‐related genes in undifferentiated and differentiated iPSCs. However, certain pathways (e.g., DNA replication) and genes (e.g., CHCHD2) were exclusively or more severely dysregulated in EHPs compared with earlier and later stages. To our knowledge, this study offers for the first time an insight into the embryonic onset of human hematopoietic defects in an inherited bone marrow failure syndrome and reveals cellular and molecular aberrations at critical stages of hematopoietic development toward EHPs. [ABSTRACT FROM AUTHOR]