Microenvironmental signals can determine hematopoietic stem cell (HSC) fate choices both directly and through stimulation of niche cells. In the bone marrow, prostaglandin E(2) (PGE(2)) is known to affect both osteoblasts and osteoclasts, whereas in vitro it expands HSCs and affects differentiation of hematopoietic progenitors. We hypothesized that in vivo PGE(2) treatment could expand HSCs through effects on both HSCs and their microenvironment. PGE(2)-treated mice had significantly decreased number of bone trabeculae, suggesting disruption of their microarchitecture. In addition, in vivo PGE(2) increased lineage(-) Sca-1(+) c-kit(+) bone marrow cells without inhibiting their differentiation. However, detailed immunophenotyping demonstrated a PGE(2)-dependent increase in short-term HSCs/multipotent progenitors (ST-HSCs/MPPs) only. Bone marrow cells transplanted from PGE(2) versus vehicle-treated donors had superior lymphomyeloid reconstitution, which ceased by 16 weeks, also suggesting that ST-HSCs were preferentially expanded. This was confirmed by serial transplantation studies. Thus in vivo PGE(2) treatment, probably through a combination of direct and microenvironmental actions, preferentially expands ST-HSCs in the absence of marrow injury, with no negative impact on hematopoietic progenitors or long-term HSCs. These novel effects of PGE(2) could be exploited clinically to increase donor ST-HSCs, which are highly proliferative and could accelerate hematopoietic recovery after stem cell transplantation.