Homeobox domain-containing transcription factors are important regulators of hematopoiesis. Here, we report that increased levels of nonclustered H2.0-like homeobox (HLX) lead to loss of functional hematopoietic stem cells and formation of aberrant progenitors with unlimited serial clonogenicity and blocked differentiation. Inhibition of HLX reduces proliferation and clonogenicity of leukemia cells, overcomes the differentiation block, and leads to prolonged survival. HLX regulates a transcriptional program, including PAK1 and BTG1, that controls cellular differentiation and proliferation. HLX is overexpressed in 87% of patients with acute myeloid leukemia (AML) and independently correlates with inferior overall survival (n = 601, p = 2.3 × 10⁻⁶). Our study identifies HLX as a key regulator in immature hematopoietic and leukemia cells and as a prognostic marker and therapeutic target in AML.