Apc, a negative regulator of the canonical Wnt signaling pathway, is a bona-fide tumor suppressor whose loss of function results in intestinal polyposis. APC is located in a commonly deleted region on human chromosome 5q, associated with myelodysplastic syndrome (MDS), suggesting that haploinsufficiency of APC contributes to the MDS phenotype. Analysis of the hematopoietic system of mice with the Apc(min) allele that results in a premature stop codon and loss of function showed no abnormality in steady state hematopoiesis. Bone marrow derived from Apc(min) mice showed enhanced repopulation potential, indicating a cell intrinsic gain of function in the long-term hematopoietic stem cell (HSC) population. However, Apc(min) bone marrow was unable to repopulate secondary recipients because of loss of the quiescent HSC population. Apc(min) mice developed a MDS/myeloproliferative phenotype. Our data indicate that Wnt activation through haploinsufficiency of Apc causes insidious loss of HSC function that is only evident in serial transplantation strategies. These data provide a cautionary note for HSC-expansion strategies through Wnt pathway activation, provide evidence that cell extrinsic factors can contribute to the development of myeloid disease, and indicate that loss of function of APC may contribute to the phenotype observed in patients with MDS and del(5q).