Transforming growth factor-beta1 (TGF-beta1) is a pleiotropic cytokine with major in vitro effects on hematopoietic stem cells (HSCs) and lymphocyte development. Little is known about hematopoiesis from mice with constitutive TGF-beta1 inactivation largely because of important embryonic lethality and development of a lethal inflammatory disorder in TGF-beta1(-/-) pups, making these studies difficult. Here, we show that no sign of the inflammatory disorder was detectable in 8- to 10-day-old TGF-beta1(-/-) neonates as judged by both the number of T-activated and T-regulator cells in secondary lymphoid organs and the level of inflammatory cytokines in sera. After T-cell depletion, the inflammatory disease was not transplantable in recipient mice. Bone marrow cells from 8- to 10-day-old TGF-beta1(-/-) neonates showed strikingly impaired short- and long-term reconstitutive activity associated with a parallel decreased in vivo homing capacity of lineage negative (Lin(-)) cells. In addition an in vitro-reduced survival of immature progenitors (Lin(-) Kit(+) Sca(+)) was observed. Similar defects were found in liver cells from TGF-beta1(-/-) embryos on day 14 after vaginal plug. These data indicate that TGF-beta1 is a critical regulator for in vivo homeostasis of the HSCs, especially for their homing potential.