Although it has been proposed that the common myeloid progenitor gives rise to granulocyte/monocyte progenitors and megakaryocyte/erythroid progenitors (MEP), little is known about molecular switches that determine whether MEPs develop into either erythrocytes or megakaryocytes. We used the thrombopoietin receptor c-Mpl, as well as the megakaryocytic marker CD41, to optimize progenitor sorting procedures to further subfractionate the MEP (CD34(+)CD110(+)CD45RA(-)) into erythroid progenitors (CD34(+)CD110(+)CD45RA(-)CD41(-)) and megakaryocytic progenitors (CD34(+)CD110(+)CD45RA(-)CD41(+)) from peripheral blood. We have identified signal transducer and activator of transcription 5 (STAT5) as a critical denominator that determined lineage commitment between erythroid and megakaryocytic cell fates. Depletion of STAT5 from CD34(+) cells by a lentiviral RNAi approach in the presence of thrombopoietin and stem cell factor resulted in an increase in megakaryocytic progenitors (CFU-Mk), whereas erythroid progenitors (BFU-E) were decreased. Furthermore, an increase in cells expressing megakaryocytic markers CD41 and CD42b was observed in STAT5 RNAi cells, as was an increase in the percentage of polyploid cells. Reversely, overexpression of activated STAT5A(1*6) mutants severely impaired megakaryocyte development and induced a robust erythroid differentiation. Microarray and quantitative reverse transcription-polymerase chain reaction analysis revealed changes in expression of a number of genes, including GATA1, which was downmodulated by STAT5 RNAi and upregulated by activated STAT5.