Chronic myelogenous leukemia (CML) is a clonal myeloproliferative disease (MPD) initiated by p210-BCR-ABL–mediated transformation of hematopoietic stem cells (HSCs). Inhibition of the ABL kinase alone is not sufficient to eradicate leukemic stem cells (LSCs). We have previously shown that the deficiency of Rac2 GTPase signaling, but not Rac1, in p210-BCR-ABL–transduced hematopoietic cells prolonged survival of mice with MPD. Here we demonstrate that absence of Rac2 GTPase prolongs survival of HSC-initiated, inducible Scl/p210-BCR-ABL (Scl/p210) binary transgenic mice, it induces apoptosis, and, unlike in normal HSC and progenitor (HSC/P), impairs LSC and progenitor (LSC/P) proliferation in vivo. As a result, Rac2 deficiency causes functional exhaustion of the LSC pool in vivo. This defect is not due to impaired interaction with the hematopoietic microenvironment as reflected by its unaltered adhesion, migration, and homing to recipient organs. In summary, Rac2 deficiency exhausts the LSC pool in vivo through impairment of oncogene-induced proliferation and survival signals.