Rho family GTPases are key signal transducers in cell regulation. Although a body of literature has implicated the Rho family members Rac1 and Rac2 in multiple hematopoietic-cell functions, the role of Cdc42 in hematopoiesis remains unclear. Here we have examined the hematopoietic properties and the hematopoietic stem/progenitor cell (HSP) functions of gene-targeted mice carrying null alleles of cdc42gap, a negative regulator of Cdc42. The Cdc42GAP^-/- fetal liver and bone marrow cells showed a 3-fold increase in Cdc42 activity but normal Rac and RhoA activities, indicating that Cdc42GAP knockout resulted in a gain of Cdc42 activity in the hematopoietic tissues. Cdc42GAP^-/- mice were anemic. The cellularity of fetal liver and bone marrow, the number and composition percentage of HSPs, and the erythroid blast-forming unit and colony-forming unit (BFU-E/CFU-E) activities were significantly reduced in the homozygous mice. The decrease in HSP number was associated with increased apoptosis of the Cdc42GAP^-/- HSPs and the activation of JNK-mediated apoptotic machinery. Moreover, homozygous HSPs showed impaired cortical F-actin assembly, deficiency in adhesion and migration, and defective engraftment. These results provide evidence that Cdc42 activity is important for erythropoiesis and for multiple HSP functions, including survival, adhesion, and engraftment.