Mre11, Rad50, and Nbs1 function in a protein complex that is central to the metabolism of chromosome breaks. Null mutants of each are inviable. We demonstrate here that hypomorphic Rad50 mutant mice (Rad50(S/S) mice) exhibited growth defects and cancer predisposition. Rad50(S/S) mice died with complete bone marrow depletion as a result of progressive hematopoietic stem cell failure. Similar attrition occurred in spermatogenic cells. In both contexts, attrition was substantially mitigated by p53 deficiency, whereas the tumor latency of p53(-/-) and p53(+/-) animals was reduced by Rad50(S/S). Indices of genotoxic stress and chromosomal rearrangements were evident in Rad50(S/S) cultured cells, as well as in Rad50(S/S) and p53(-/-) Rad50(S/S) lymphomas, suggesting that the Rad50(S/S) phenotype was attributable to chromosomal instability. These outcomes were not associated with overt defects in the Mre11 complex's previously established double strand break repair and cell cycle checkpoint regulation functions. The data indicate that even subtle perturbation of Mre11 complex functions results in severe genotoxic stress, and that the complex is critically important for homeostasis of proliferative tissues.