The role of Wnt signaling in hematopoietic stem cell fate decisions remains controversial. We elected to dysregulate Wnt signaling from the perspective of the stem cell niche by expressing the pan Wnt inhibitor, Wnt inhibitory factor 1 (Wif1), specifically in osteoblasts. Here we report that osteoblastic Wif1 overexpression disrupts stem cell quiescence, leading to a loss of self-renewal potential. Primitive stem and progenitor populations were more proliferative and elevated in bone marrow and spleen, manifesting an impaired ability to maintain a self-renewing stem cell pool. Exhaustion of the stem cell pool was apparent only in the context of systemic stress by chemotherapy or transplantation of wild-type stem cells into irradiated Wif1 hosts. Paradoxically this is mediated, at least in part, by an autocrine induction of canonical Wnt signaling in stem cells on sequestration of Wnts in the environment. Additional signaling pathways are dysregulated in this model, primarily activated Sonic Hedgehog signaling in stem cells as a result of Wif1-induced osteoblastic expression of Sonic Hedgehog. We find that dysregulation of the stem cell niche by overexpression of an individual component impacts other unanticipated regulatory pathways in a combinatorial manner, ultimately disrupting niche mediated stem cell fate decisions.