The phosphatase and tumor suppressor PTEN inhibits the phosphoinositol-3-kinase (PI3K) signaling pathway and plays a key role in cell growth, proliferation, survival, and migration. Pten conditional deletion using MxCre or Scl-CreERT leads to splenomegaly and leukemia formation, which occurs after the relocation of normal hematopoietic stem cells (HSCs) from the bone marrow to the spleen. Unexpectedly, dormant HSCs in the bone marrow do not enter the cell cycle upon Pten loss, they do not lose self-renewal activity, and they are not exhausted. Instead, Pten deficiency causes an up-regulation of the PI3K pathway in myeloid cells, but not in HSCs. Strikingly, myeloid cells secrete high levels of G-CSF upon Pten loss, leading to the mobilization of HSCs from the bone marrow and accumulation in the spleen. After deletion of Pten in mice lacking G-CSF, the splenomegaly, myeloproliferative disease, and splenic HSC accumulation are rescued. Our data show that although PTEN has little if any role in normal HSCs, it is essential to prevent overt G-CSF production by myeloid and stromal cells which otherwise causes HSCs to relocate to the spleen followed by lethal leukemia initiation.