Niemann-Pick type C2 (NPC2) protein has been characterized as a cholesterol-binding protein. Its loss leads to NPC2 disease, an inherited neurodegenerative disorder. When analyzing gene expression profile, we noticed high expression of both NPC2 and its receptor, mannose 6-phosphate receptor (MPR), in murine hematopoietic stem cells. NPC2 protein, in the presence of thrombopoietin (TPO), causes an increase in CFU-GEMM (colony-forming unit-granulocyte-erythroid-macrophage-megakaryocyte) and a decrease in CFU-GM (colony-forming unit-granulocyte-macrophage) colony number in colony-forming cell (CFC) assays. This effect is independent of cholesterol binding but does require the presence of MPR. With M07e cells, a TPO-dependent hematopoietic leukemia cell line, NPC2 can inhibit TPO-induced differentiation and enhance TPO-mediated anti-apoptosis effects. Strikingly, these results are not observed under the standard 20% O(2) level of the standard incubator, but rather at 7% O(2), the physiological oxygen level of bone marrow. Furthermore, NPC2 protein upregulates hypoxia inducible factor 1-alpha protein level at 7% O(2), but not at 20% O(2). Our results demonstrate that NPC2 protein plays a role in hematopoiesis at the physiologic bone marrow level of O(2).