Nucleophosmin (also known as NPM, B23, NO38) is a nucleolar protein directly implicated in cancer pathogenesis, as the NPM1 gene is found mutated and rearranged in a number of haematological disorders. Furthermore, the region of chromosome 5 to which NPM1 maps is deleted in a proportion of de novo human myelodysplastic syndromes (MDS), and loss of chromosome 5 is extremely frequent in therapy-related MDS. NPM is a multifunctional protein, and its role in oncogenesis is controversial as NPM has been attributed with both oncogenic and tumour suppressive functions. To study the function of Npm in vivo, we generated a hypomorphic Npm1 mutant series (Npm1+/- < Npm1(hy/hy) < Npm1-/-) in mouse. Here we report that Npm is essential for embryonic development and the maintenance of genomic stability. Npm1-/- and Npm1(hy/hy) mutants have aberrant organogenesis and die between embryonic day E11.5 and E16.5 owing to severe anaemia resulting from defects in primitive haematopoiesis. We show that Npm1 inactivation leads to unrestricted centrosome duplication and genomic instability. We demonstrate that Npm is haploinsufficient in the control of genetic stability and that Npm1 heterozygosity accelerates oncogenesis both in vitro and in vivo. Notably, Npm1+/- mice develop a haematological syndrome with features of human MDS. Our findings uncover an essential developmental role for Npm and implicate its functional loss in tumorigenesis and MDS pathogenesis.