Drosophila hematopoiesis occurs in a specialized organ called the lymph gland. In this systematic analysis of lymph gland structure and gene expression, we define the developmental steps in the maturation of blood cells (hemocytes) from their precursors. In particular, distinct zones of hemocyte maturation, signaling and proliferation in the lymph gland during hematopoietic progression are described. Different stages of hemocyte development have been classified according to marker expression and placed within developmental niches: a medullary zone for quiescent prohemocytes, a cortical zone for maturing hemocytes and a zone called the posterior signaling center for specialized signaling hemocytes. This establishes a framework for the identification of Drosophila blood cells, at various stages of maturation, and provides a genetic basis for spatial and temporal events that govern hemocyte development. The cellular events identified in this analysis further establish Drosophila as a model system for hematopoiesis.