Cyclic hematopoiesis is a stem cell disease in which the number of neutrophils and other blood cells oscillates in weekly phases. Autosomal dominant mutations of ELA2, encoding the protease neutrophil elastase, found in lysosome-like granules, cause cyclic hematopoiesis and most cases of the pre-leukemic disorder severe congenital neutropenia (SCN; ref. 3) in humans. Over 20 different mutations of neutrophil elastase have been identified, but their consequences are elusive, because they confer no consistent effects on enzymatic activity. The similar autosomal recessive disease of dogs, canine cyclic hematopoiesis, is not caused by mutations in ELA2 (data not shown). Here we show that homozygous mutation of the gene encoding the dog adaptor protein complex 3 (AP3) beta-subunit, directing trans-Golgi export of transmembrane cargo proteins to lysosomes, causes canine cyclic hematopoiesis. C-terminal processing of neutrophil elastase exposes an AP3 interaction signal responsible for redirecting neutrophil elastase trafficking from membranes to granules. Disruption of either neutrophil elastase or AP3 perturbs the intracellular trafficking of neutrophil elastase. Most mutations in ELA2 that cause human cyclic hematopoiesis prevent membrane localization of neutrophil elastase, whereas most mutations in ELA2 that cause SCN lead to exclusive membrane localization.