MicroRNA-125b (miR-125b) is up-regulated in patients with leukemia. Overexpression of miR-125b alone in mice causes a very aggressive, transplantable myeloid leukemia. Before leukemia, these mice do not display elevation of white blood cells in the spleen or bone marrow; rather, the hematopoietic compartment shows lineage-skewing, with myeloid cell numbers dramatically increased and B-cell numbers severely diminished. miR-125b exerts this effect by up-regulating the number of common myeloid progenitors while inhibiting development of pre-B cells. We applied a miR-125b sponge loss of function system in vivo to show that miR-125b physiologically regulates hematopoietic development. Investigating the mechanism by which miR-125b regulates hematopoiesis, we found that, among a panel of candidate targets, the mRNA for Lin28A, an induced pluripotent stem cell gene, was most repressed by miR-125b in mouse hematopoietic stem and progenitor cells. Overexpressing Lin28A in the mouse hematopoietic system mimicked the phenotype observed on inhibiting miR-125b function, leading to a decrease in hematopoietic output. Relevant to the miR-125b overexpression phenotype, we also found that knockdown of Lin28A led to hematopoietic lineage-skewing, with increased myeloid and decreased B-cell numbers. Thus, the miR-125b target Lin28A is an important regulator of hematopoiesis and a primary target of miR-125b in the hematopoietic system.