Histone deacetylase 3 (HDAC3) contributes to the regulation of gene expression, chromatin structure, and genomic stability. Because HDAC3 associates with oncoproteins that drive leukemia and lymphoma, we engineered a conditional deletion allele in mice to explore the physiological roles of Hdac3 in hematopoiesis. We used the Vav-Cre transgenic allele to trigger recombination, which yielded a dramatic loss of lymphoid cells, hypocellular bone marrow, and mild anemia. Phenotypic and functional analysis suggested that Hdac3 was required for the formation of the earliest lymphoid progenitor cells in the marrow, but that the marrow contained 3–5 times more multipotent progenitor cells. Hdac3–/– stem cells were severely compromised in competitive bone marrow transplantation. In vitro, Hdac3–/– stem and progenitor cells failed to proliferate, and most cells remained undifferentiated. Moreover, one-third of the Hdac3–/– stem and progenitor cells were in S phase 2 hours after BrdU labeling in vivo, suggesting that these cells were impaired in transit through the S phase. DNA fiber-labeling experiments indicated that Hdac3 was required for efficient DNA replication in hematopoietic stem and progenitor cells. Thus, Hdac3 is required for the passage of hematopoietic stem/progenitor cells through the S phase, for stem cell functions, and for lymphopoiesis.