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Myeloproliferative disorders (MPDs), diagnosed in 15,000 individuals annually, are characterized by overproduction of lineage-committed blood cells, thrombotic events, occasionally marrow fibrosis or progression to acute myelogenous leukemia and frequently a point mutation (V617F) in the JAK2 kinase. Mutant JAK2 expression results in erythrocyte overproduction in almost all cases of polycythemia Vera (PV). We investigated the molecular mechanisms driving erythroid skewed differentiation and the capacity of a selective JAK2 inhibitor (TG101348) to normalize PV progenitor differentiation. Both JAK2 V617F+ transduced cord blood and PV progenitor erythroid colony formation was potently inhibited by TG101348 (300 nM). Bioluminescent immunocompromised mouse transplantation studies revealed that TG101348 (150 mg/kg) treatment significantly reduced human erythroid engraftment by both PV and JAK2 V617F+ cord blood progenitors. Moreover, the imbalance between GATA-1 and PU.1 transcripts typical of JAK2 V617F+ progenitors normalized after treatment with TG101348. In addition, TG101348 inhibited both JAK2-mediated STAT5 phosphorylation and AKT-regulated GATA-1 phosphorylation in an erythropoietin responsive cell line suggesting a dual mechanism for the erythroid inhibitory effects of TG101348. Because of selective inhibition of JAK2 V617F+ progenitors both in vitro and in vivo, TG101348 may be an effective molecularly targeted inhibitor of JAK2 V617F+ driven MPDs in clinical trials.