Reactive oxygen species (ROS) participate in normal intracellular signalling and in many diseases including cancer and aging, although the associated mechanisms are not fully understood. Forkhead Box O (FoxO) 3 transcription factor regulates levels of ROS concentrations, and is essential for maintenance of hematopoietic stem cells. Here, we show that loss of Foxo3 causes a myeloproliferative syndrome with splenomegaly and increased hematopoietic progenitors (HPs) that are hypersensitive to cytokines. These mutant HPs contain increased ROS, overactive intracellular signalling through the AKT/mammalian target of rapamycin signalling pathway and relative deficiency of Lnk, a negative regulator of cytokine receptor signalling. In vivo treatment with ROS scavenger N-acetyl-cysteine corrects these biochemical abnormalities and relieves the myeloproliferation. Moreover, enforced expression of Lnk by retroviral transfer corrects the abnormal expansion of Foxo3(-/-) HPs in vivo. Our combined results show that loss of Foxo3 causes increased ROS accumulation in HPs. In turn, this inhibits Lnk expression that contributes to exaggerated cytokine responses that lead to myeloproliferation. Our findings could explain the mechanisms by which mutations that alter Foxo3 function induce malignancy. More generally, the work illustrates how deregulated ROS may contribute to malignant progression.