Recent descriptions of significant heterogeneity in normal stem cells and cancers have altered our understanding of tumorigenesis, emphasizing the need to understand how single stem cells are subverted to cause tumors. Human myeloproliferative neoplasms (MPNs) are thought to reflect transformation of a hematopoietic stem cell (HSC) and the majority harbor an acquired V617F mutation in the JAK2 tyrosine kinase, making them a paradigm for studying the early stages of tumor establishment and progression. The consequences of activating tyrosine kinase mutations for stem and progenitor cell behavior are unclear. In this article, we identify a distinct cellular mechanism operative in stem cells. By using conditional knock-in mice, we show that the HSC defect resulting from expression of heterozygous human JAK2V617F is both quantitative (reduced HSC numbers) and qualitative (lineage biases and reduced self-renewal per HSC). The defect is intrinsic to individual HSCs and their progeny are skewed toward proliferation and differentiation as evidenced by single cell and transplantation assays. Aged JAK2V617F show a more pronounced defect as assessed by transplantation, but mice that transform reacquire competitive self-renewal ability. Quantitative analysis of HSC-derived clones was used to model the fate choices of normal and JAK2-mutant HSCs and indicates that JAK2V617F reduces self-renewal of individual HSCs but leaves progenitor expansion intact. This conclusion is supported by paired daughter cell analyses, which indicate that JAK2-mutant HSCs more often give rise to two differentiated daughter cells. Together these data suggest that acquisition of JAK2V617F alone is insufficient for clonal expansion and disease progression and causes eventual HSC exhaustion. Moreover, our results show that clonal expansion of progenitor cells provides a window in which collaborating mutations can accumulate to drive disease progression. Characterizing the mechanism(s) of JAK2V617F subclinical clonal expansions and the transition to overt MPNs will illuminate the earliest stages of tumor establishment and subclone competition, fundamentally shifting the way we treat and manage cancers.