Maintenance of the blood system is dependent on dormant haematopoietic stem cells (HSCs) with long-term self-renewal capacity. After injury these cells are induced to proliferate to quickly reestablish homeostasis(1). The signalling molecules promoting the exit of HSCs out of the dormant stage remain largely unknown. Here we show that in response to treatment of mice with interferon-alpha (IFN alpha), HSCs efficiently exit G(0) and enter an active cell cycle. HSCs respond to IFN alpha treatment by the increased phosphorylation of STAT1 and PKB/Akt (also known as AKT1), the expression of IFN alpha target genes, and the upregulation of stem cell antigen-1 (Sca-1, also known as LY6A). HSCs lacking the IFN alpha/beta receptor (IFNAR)(2), STAT1 (ref. 3) or Sca-1 (ref. 4) are insensitive to IFN alpha stimulation, demonstrating that STAT1 and Sca-1 mediate IFN alpha-induced HSC proliferation. Although dormant HSCs are resistant to the anti-proliferative chemotherapeutic agent 5-fluoro-uracil(1,5), HSCs pre-treated (primed) with IFN alpha and thus induced to proliferate are efficiently eliminated by 5-fluoro-uracil exposure in vivo. Conversely, HSCs chronically activated by IFN alpha are functionally compromised and are rapidly out-competed by non-activatable Ifnar(-/-) cells in competitive repopulation assays. Whereas chronic activation of the IFN alpha pathway in HSCs impairs their function, acute IFN alpha treatment promotes the proliferation of dormant HSCs in vivo. These data may help to clarify the so far unexplained clinical effects of IFN alpha on leukaemic cells(6,7), and raise the possibility for new applications of type I interferons to target cancer stem cells(8).