The present provides methods for affecting and / or altering the differentiation state of a cell. In certain embodiments, the present invention provides methods to transdifferentiate a cell into an endothelial cell or a hematopoietic cell. In the practice of the invention, a demethylating agent (e.g., 5-azacytidine) is used to affect and / or alter the differentiation state of a cell. The invention demonstrates the transdifferentiation of numerous cell types, including cell populations that are themselves somewhat differentiated (e.g., normal fibroblasts) into distinct cell types, including hematopoietic cells and endothelial cells, which transdifferentiation is effected further through the selection of particular growth factors which, together with the demethylating agents, directs the differentiation path. The invention provides a novel approach to providing useful cell types for many types of medical applications.