The c-fes protooncogene encodes a nonreceptor tyrosine kinase (Fes) implicated in cytokine receptor signal transduction, neutrophil survival, and myeloid differentiation. To determine the role of Fes in embryonic development and hematopoiesis, we engineered a null mutation of the murine c-fes locus. c-fes(-/-) mice are viable but not born in the expected Mendelian ratios. Live born c-fes(-/-) mice exhibit lymphoid/myeloid homeostasis defects, compromised innate immunity, and increased Stat activation in response to GM-CSF and IL-6 signaling. Therefore, increased cytokine responsiveness in the absence of Fes leads to abnormal myeloid proliferation and functional defects in the macrophage lineage.