The addition of O-GlcNAc (a single β-D-N-acetylglucosamine sugar at serine and threonine residues) by O-GlcNAc transferase (OGT) and removal by O-GlcNAcase (OGA) maintains homeostatic levels of O-GlcNAc. We investigated the role of O-GlcNAc homeostasis in hematopoiesis utilizing G1E-ER4 cells carrying a GATA-1 transcription factor fused to the estrogen receptor (GATA-1ER) that undergo erythropoiesis following the addition of β-estradiol (E2) and myeloid leukemia cells that differentiate into neutrophils in the presence of all-trans retinoic acid. During G1E-ER4 differentiation, a decrease in overall O-GlcNAc levels and an increase in GATA-1 interactions with OGT and OGA were observed. Transcriptome analysis on G1E-ER4 cells differentiated in the presence of Thiamet-G (TMG), an OGA inhibitor, identified expression changes in 433 GATA-1 target genes. Chromatin immunoprecipitation demonstrated that the occupancy of GATA-1, OGT, and OGA at Laptm5 gene GATA site was decreased with TMG. Myeloid leukemia cells showed a decline in O-GlcNAc levels during differentiation and TMG reduced the expression of genes involved in differentiation. Sustained treatment with TMG in G1E-ER4 cells prior to differentiation caused a reduction of hemoglobin positive cells during differentiation. Our results show that alterations in O-GlcNAc homeostasis disrupt transcriptional programs causing differentiation errors suggesting a vital role of O-GlcNAcylation in control of cell fate.