The serine protease granzyme B (GzmB) is stored in the granules of cytotoxic T and NK cells and facilitates immune-mediated destruction of virus-infected cells. In this study, we use genetic tools to report novel roles for GzmB as an important regulator of hematopoietic stem cell (HSC) function in response to stress. HSCs lacking the GzmB gene show improved bone marrow (BM) reconstitution associated with increased HSC proliferation and mitochondrial activity. In addition, recipients deficient in GzmB support superior engraftment of wild-type HSCs compared with hosts with normal BM niches. Stimulation of mice with lipopolysaccharide strongly induced GzmB protein expression in HSCs, which was mediated by the TLR4–TRIF–p65 NF-κB pathway. This is associated with increased cell death and GzmB secretion into the BM environment, suggesting an extracellular role of GzmB in modulating HSC niches. Moreover, treatment with the chemotherapeutic agent 5-fluorouracil (5-FU) also induces GzmB production in HSCs. In this situation GzmB is not secreted, but instead causes cell-autonomous apoptosis. Accordingly, GzmB-deficient mice are more resistant to serial 5-FU treatments. Collectively, these results identify GzmB as a negative regulator of HSC function that is induced by stress and chemotherapy in both HSCs and their niches. Blockade of GzmB production may help to improve hematopoiesis in various situations of BM stress.