In individuals with chronic myeloid leukemia (CML) treated by autologous hematopoietic stem cell (HSC) transplantation, malignant progenitors in the graft contribute to leukemic relapse, but the mechanisms of homing and engraftment of leukemic CML stem cells are unknown. Here we show that CD44 expression is increased on mouse stem-progenitor cells expressing BCR-ABL and that CD44 contributes functional E-selectin ligands. In a mouse retroviral transplantation model of CML, BCR-ABL1–transduced progenitors from CD44-mutant donors are defective in homing to recipient marrow, resulting in decreased engraftment and impaired induction of CML-like myeloproliferative disease. By contrast, CD44-deficient stem cells transduced with empty retrovirus engraft as efficiently as do wild-type HSCs. CD44 is dispensable for induction of acute B-lymphoblastic leukemia by BCR-ABL, indicating that CD44 is specifically required on leukemic cells that initiate CML. The requirement for donor CD44 is bypassed by direct intrafemoral injection of BCR-ABL1–transduced CD44-deficient stem cells or by coexpression of human CD44. Antibody to CD44 attenuates induction of CML-like leukemia in recipients. These results show that BCR-ABL–expressing leukemic stem cells depend to a greater extent on CD44 for homing and engraftment than do normal HSCs, and argue that CD44 blockade may be beneficial in autologous transplantation in CML.