Somatic Addition of Sex Combs Like 1 (ASXL1) mutations occur in 10-30% of patients with myeloid malignancies, most commonly in myelodysplastic syndromes (MDSs), and are associated with adverse outcome. Germline ASXL1 mutations occur in patients with Bohring-Opitz syndrome. Here, we show that constitutive loss of Asxl1 results in developmental abnormalities, including anophthalmia, microcephaly, cleft palates, and mandibular malformations. In contrast, hematopoietic-specific deletion of Asxl1 results in progressive, multilineage cytopenias and dysplasia in the context of increased numbers of hematopoietic stem/progenitor cells, characteristic features of human MDS. Serial transplantation of Asxl1-null hematopoietic cells results in a lethal myeloid disorder at a shorter latency than primary Asxl1 knockout (KO) mice. Asxl1 deletion reduces hematopoietic stem cell self-renewal, which is restored by concomitant deletion of Tet2, a gene commonly co-mutated with ASXL1 in MDS patients. Moreover, compound Asxl1/Tet2 deletion results in an MDS phenotype with hastened death compared with single-gene KO mice. Asxl1 loss results in a global reduction of H3K27 trimethylation and dysregulated expression of known regulators of hematopoiesis. RNA-Seq/ChIP-Seq analyses of Asxl1 in hematopoietic cells identify a subset of differentially expressed genes as direct targets of Asxl1. These findings underscore the importance of Asxl1 in Polycomb group function, development, and hematopoiesis.