Paroxysmal nocturnal hemoglobinuria (PNH) develops in patients who have had a somatic mutation in the X-linked PIG-A gene in a hematopoietic stem cell; as a result, a proportion of blood cells are deficient in all glycosyl phosphatidylinositol (GPI)-anchored proteins. Although the PIG-A mutation explains the phenotype of PNH cells, the mechanism enabling the PNH stem cell to expand is not clear. To examine this growth behavior, and to investigate the role of GPI-linked proteins in hematopoietic differentiation, we have inactivated the pig-a gene by homologous recombination in mouse embryonic stem (ES) cells. In mouse chimeras, pig-a- ES cells were able to contribute to hematopoiesis and to differentiate into mature red cells, granulocytes, and lymphocytes with the PNH phenotype. The proportion of PNH red cells was substantial in the fetus, but decreased rapidly after birth. Likewise, PNH granulocytes could only be demonstrated in the young mouse. In contrast, the percentage of lymphocytes deficient in GPI-linked proteins was more stable. In vitro, pig-a- ES cells were able to form pig-a- embryoid bodies and to undergo hematopoietic (erythroid and myeloid) differentiation. The number and the percentage of pig-a- embryoid bodies with hematopoietic differentiation, however, were significantly lower when compared with wild-type embryoid bodies. Our findings demonstrate that murine ES cells with a nonfunctional pig-a gene are competent for hematopoiesis, and give rise to blood cells with the PNH phenotype. pig-a inactivation on its own, however, does not confer a proliferative advantage to the hematopoietic stem cell. This provides direct evidence for the notion that some additional factor(s) are needed for the expansion of the mutant clone in patients with PNH.