The Mre11 complex promotes DNA double-strand break repair and regulates DNA damage signaling via activation of the ataxia-telangiectasia mutated (ATM) kinase. The hypermorphic Rad50(S) allele encodes a variant of Rad50, a member of the Mre11 complex. Cells expressing Rad50(S) experience constitutive ATM activation, which leads to precipitous apoptotic attrition in hematopoietic cells. In this study, we show that ATM activation by the Rad50S-containing Mre11 complex enhances the proliferation of LSK cells, a population consisting of hematopoietic stem cells and multipotent progenitor cells. In Rad50(S/S) mice, enhanced LSK proliferation triggers apoptotic attrition. This phenotype is mitigated when Rad50(S/S) is combined with mutations that alter either LSK cell quiescence (myeloid elf-1-like factor/ELF4-deficient mice) or hematopoietic differentiation (p21- and p27-deficient mice), indicating that the LSK population is a primary target of Rad50(S) pathology. We show that cells from Rad50(S/S) mice are hypersensitive to camptothecin, a topoisomerase I inhibitor that causes DNA damage primarily during DNA replication. On this basis, we propose that apoptotic attrition of Rad50(S/S) hematopoietic cells results from enhanced proliferation in the context of topoisomerase-associated DNA damage. Impairment of apoptosis in Rad50(S/S) mice promotes hematopoietic malignancy, suggesting that primitive hematopoietic cells serve as a reservoir of potentially oncogenic lesions in Rad50(S/S) mice. These data provide compelling evidence that the Mre11 complex plays a role in the metabolism of topoisomerase lesions in mammals, and further suggest that such lesions can accumulate in primitive hematopoietic cells and confer significant oncogenic potential.