Gain of Wnt signaling through beta-catenin has been ascribed a critical function in the stimulation of hematopoietic stem cell self-renewal, whereas loss of beta-catenin is reportedly dispensable for hematopoiesis. Here we have used conditional mouse genetics and transplantation assays to demonstrate that constitutive activation of beta-catenin blocked multilineage differentiation, leading to the death of mice. Blood cell depletion was accompanied by failure of hematopoietic stem cells to repopulate irradiated hosts and to differentiate into mature cells. Activation of beta-catenin enforced cell cycle entry of hematopoietic stem cells, thus leading to exhaustion of the long-term stem cell pool. Our data suggest that fine-tuned Wnt stimulation is essential for hematopoiesis and is thus critical for therapeutic hematopoietic stem cell population expansion.