BCOR is a component of a variant Polycomb group repressive complex 1 (PRC1). Recently, we and others reported recurrent somatic BCOR loss-of-function mutations in myelodysplastic syndrome and acute myelogenous leukemia (AML). However, the role of BCOR in normal hematopoiesis is largely unknown. Here, we explored the function of BCOR in myeloid cells using myeloid murine models with Bcor conditional loss-of-function or overexpression alleles. Bcor mutant bone marrow cells showed significantly higher proliferation and differentiation rates with upregulated expression of Hox genes. Mutation of Bcor reduced protein levels of RING1B, an H2A ubiquitin ligase subunit of PRC1 family complexes and reduced H2AK119ub upstream of upregulated HoxA genes. Global RNA expression profiling in murine cells and AML patient samples with BCOR loss-of-function mutation suggested that loss of BCOR expression is associated with enhanced cell proliferation and myeloid differentiation. Our results strongly suggest that BCOR plays an indispensable role in hematopoiesis by inhibiting myeloid cell proliferation and differentiation and offer a mechanistic explanation for how BCOR regulates gene expression such as Hox genes.