A first step in hematopoiesis is the specification of the lymphoid and myeloid lineages from multipotent progenitor cells in the bone marrow. Using a conditional ablation strategy in adult mice, we show that this differentiation step requires Patched (Ptch), the cell surface–bound receptor for Hedgehog (Hh). In the absence of Ptch, the development of T- and B-lymphoid lineages is blocked at the level of the common lymphoid progenitor in the bone marrow. Consequently, the generation of peripheral T and B cells is abrogated. Cells of the myeloid lineage develop normally in Ptch mutant mice. Finally, adoptive transfer experiments identified the stromal cell compartment as a critical Ptch-dependent inducer of lymphoid versus myeloid lineage commitment. Our data show that Ptch acts as a master switch for proper diversification of hematopoietic stem cells in the adult organism.