Maintenance of the blood system is dependent on dormant haematopoietic stem cells (HSCs) with long-term self-renewal capacity. After injury these cells are induced to proliferate to quickly re-establish homeostasis. The signalling molecules promoting the exit of HSCs out of the dormant stage remain largely unknown. Here we show that in response to treatment of mice with interferon-alpha (IFNalpha), HSCs efficiently exit G(0) and enter an active cell cycle. HSCs respond to IFNalpha treatment by the increased phosphorylation of STAT1 and PKB/Akt (also known as AKT1), the expression of IFNalpha target genes, and the upregulation of stem cell antigen-1 (Sca-1, also known as LY6A). HSCs lacking the IFNalpha/beta receptor (IFNAR), STAT1 (ref. 3) or Sca-1 (ref. 4) are insensitive to IFNalpha stimulation, demonstrating that STAT1 and Sca-1 mediate IFNalpha-induced HSC proliferation. Although dormant HSCs are resistant to the anti-proliferative chemotherapeutic agent 5-fluoro-uracil, HSCs pre-treated (primed) with IFNalpha and thus induced to proliferate are efficiently eliminated by 5-fluoro-uracil exposure in vivo. Conversely, HSCs chronically activated by IFNalpha are functionally compromised and are rapidly out-competed by non-activatable Ifnar(-/-) cells in competitive repopulation assays. Whereas chronic activation of the IFNalpha pathway in HSCs impairs their function, acute IFNalpha treatment promotes the proliferation of dormant HSCs in vivo. These data may help to clarify the so far unexplained clinical effects of IFNalpha on leukaemic cells, and raise the possibility for new applications of type I interferons to target cancer stem cells.