Erythropoiesis is a multiweek program coupling massive proliferation with progressive cellular differentiation ultimately enabling a limited number of hematopoietic stem cells (HSCs) to yield millions of erythrocytes per second1. Erythropoietin (Epo) is essential for red blood cell (RBC) production but this cytokine acts well after irreversible commitment of hematopoietic progenitor cells (HPCs) to an erythroid fate. It is not known if terminal erythropoiesis is tethered to the pool of available immature hematopoietic stem and progenitor cells (HSPCs). We now report that megakaryocyte-derived TGF{beta}1 compartmentalizes hematopoiesis by coupling HPC numbers to production of mature erythrocytes. Genetic deletion of TGF{beta}1 specifically in megakaryocytes (TGF{beta}1{Delta}Mk/{Delta}Mk) increased functional HSPCs including committed erythroid progenitors, yet total bone marrow and spleen cellularity and peripheral blood cell counts were entirely normal. Instead, excess erythroid precursors underwent apoptosis, predominantly those erythroblasts expressing the Epo receptor (Epor) but not Kit. Despite there being no deficiency of plasma Epo in TGF{beta}1{Delta}Mk/{Delta}Mk mice, exogenous Epo rescued survival of excess erythroid precursors and triggered exuberant erythropoiesis. In contrast, exogenous TGF{beta}1 caused anemia and failed to rescue erythroid apoptosis despite its ability to restore downstream TGF{beta}-mediated Smad2/3 phosphorylation in HSPCs. Thus, megakaryocytic TGF{beta}1 regulates the size of the pool of immature HSPCs and in so doing, improves the efficiency of erythropoiesis by governing the feed of lineage-committed erythroid progenitors whose fate is decided by extramedullary renal Epo-producing cells sensing the need for new RBCs. Independent manipulation of distinct immature Epo-unresponsive HSPCs within the hematopoietic compartments offers a new strategy to overcome chronic anemias or possibly other cytopenias.