In utero transplantation (IUT) of hematopoietic stem cells (HSCs) has been proposed as a strategy for the prenatal treatment of congenital hematological diseases. However, levels of long‐term hematopoietic engraftment achieved in experimental IUT to date are subtherapeutic, likely due to host fetal HSCs outcompeting their bone marrow (BM)‐derived donor equivalents for space in the hematopoietic compartment. In the present study, we demonstrate that amniotic fluid stem cells (AFSCs; c‐Kit+/Lin−) have hematopoietic characteristics and, thanks to their fetal origin, favorable proliferation kinetics in vitro and in vivo, which are maintained when the cells are expanded. IUT of autologous/congenic freshly isolated or cultured AFSCs resulted in stable multilineage hematopoietic engraftment, far higher to that achieved with BM‐HSCs. Intravascular IUT of allogenic AFSCs was not successful as recently reported after intraperitoneal IUT. Herein, we demonstrated that this likely due to a failure of timely homing of donor cells to the host fetal thymus resulted in lack of tolerance induction and rejection. This study reveals that intravascular IUT leads to a remarkable hematopoietic engraftment of AFSCs in the setting of autologous/congenic IUT, and confirms the requirement for induction of central tolerance for allogenic IUT to be successful. Autologous, gene‐engineered, and in vitro expanded AFSCs could be used as a stem cell/gene therapy platform for the in utero treatment of inherited disorders of hematopoiesis. Stem Cells 2019;37:1176–1188