Infection of primates by HIV-1 and SIV induces multiple hematological abnormalities of central hematopoietic origin. Although these defects greatly contribute to the pathophysiology of HIV-1 infection, the molecular basis for altered BM function remains unknown. Here we show that when cynomolgus macaques were infected with SIV, the multipotent potential of their hematopoietic progenitor cells was lost, and this correlated with downregulation of STAT5A and STAT5B expression. However, forced expression of STAT5B entirely rescued the multipotent potential of the hematopoietic progenitor cells. In addition, an accessory viral protein required for efficient SIV and HIV replication and pathogenicity, "Negative factor" (Nef), was essential for SIV-mediated impairment of the multipotent potential of hematopoietic progenitors ex vivo and in vivo. This newly uncovered property of Nef was both conserved between HIV-1 and SIV strains and entirely dependent upon the presence of PPARgamma in targeted cells. Further, PPARgamma agonists mimicked Nef activity by inhibiting STAT5A and STAT5B expression and hampering the functionality of hematopoietic progenitors both ex vivo and in vivo. These findings have extended the role of Nef in the pathogenicity of HIV-1 and SIV and reveal a pivotal role for the PPARgamma/STAT5 pathway in the regulation of early hematopoiesis. This study may provide a basis for investigating the potential therapeutic benefits of PPARgamma antagonists in both patients with AIDS and individuals with hematopoietic disorders.