SH2-containing inositol 5-phosphatase (SHIP) is an important negative regulator of cytokine and immune receptor signaling. SHIP-deficient mice have a number of hematopoietic perturbations, including enhanced cytokine responsiveness. Because cytokines play an important role in the maintenance/expansion of the primitive hematopoietic cell pool, we investigated the possibility that SHIP also regulates the properties of cells in these compartments. Primitive hematopoietic cells were evaluated in SHIP-deficient mice and wild-type littermate controls using the colony-forming unit-spleen (CFU-S) and competitive repopulating unit (CRU) assays for multipotent progenitors and long-term lympho-myeloid repopulating cells, respectively. Absence of SHIP was found to affect homeostasis of CFU-S and CRU compartments. Numbers of primitive cells were increased in extramedullary sites such as the spleen of SHIP-deficient mice, although total body numbers were not significantly changed. In vivo cell cycle status of the CRU compartment was further evaluated using 5-fluorouracil (5-FU). SHIP-deficient CRUs were more sensitive to 5-FU killing, indicating a higher proliferative cell fraction. More strikingly, SHIP was found to regulate the ability of primitive cells to regenerate in vivo, as CRU recovery was approximately 30-fold lower in mice that received transplants of SHIP-deficient cells compared with controls. These results support a major role for SHIP in modulating pathways important in homeostasis and regeneration of hematopoietic stem cells, and emphasize the importance of negative cytokine regulation at the earliest stages of hematopoiesis.