Ectopic retroviral expression of homeobox B4 (HOXB4) causes an accelerated and enhanced regeneration of murine hematopoietic stem cells (HSCs) and is not known to compromise any program of lineage differentiation. However, HOXB4 expression levels for expansion of human stem cells have still to be established. To test the proposed hypothesis that HOXB4 could become a prime tool for in vivo expansion of genetically modified human HSCs, we retrovirally overexpressed HOXB4 in purified cord blood (CB) CD34⁺ cells together with green fluorescent protein (GFP) as a reporter protein, and evaluated the impact of ectopic HOXB4 expression on proliferation and differentiation in vitro and in vivo. When injected separately into nonobese diabetic–severe combined immunodeficient (NOD/SCID) mice or in competition with control vector–transduced cells, HOXB4-overexpressing cord blood CD34⁺ cells had a selective growth advantage in vivo, which resulted in a marked enhancement of the primitive CD34⁺ subpopulation (P = .01). However, high HOXB4 expression substantially impaired the myeloerythroid differentiation program, and this was reflected in a severe reduction of erythroid and myeloid progenitors in vitro (P < .03) and in vivo (P = .01). Furthermore, HOXB4 overexpression also significantly reduced B-cell output (P < .01). These results show for the first time unwanted side effects of ectopic HOXB4 expression and therefore underscore the need to carefully determine the therapeutic window of HOXB4 expression levels before initializing clinical trials.