A comprehensive understanding of genes and pathways regulating hematopoiesis is needed to identify genes causally related to bone marrow failure syndromes, myelodysplastic syndromes and hematopoietic neoplasms. To identify novel genes involved in hematopoiesis, we performed an ENU mutagenesis screen in zebrafish looking for mutants with defective definitive hematopoiesis. We report the recovery and analysis of the grechetto mutant, which harbors an inactivating mutation in cleavage and polyadenylation specificity factor 1 (cpsf1), a gene ubiquitously expressed and required for 3' UTR processing of a subset of pre-mRNAs. Grechetto mutants undergo normal primitive hematopoiesis and specify appropriate numbers of definitive hematopoietic stem cells (HSCs) at 36 hpf. However, when HSCs migrate to the caudal hematopoietic tissue (CHT) at 3 dpf, their numbers start decreasing as a result of apoptotic cell death. Consistent with Cpsf1 function, c-myb:EGFP+ cells in grechetto mutants also show defective polyadenylation of snrnp70, a gene required for HSC development. By 5 dpf, definitive hematopoiesis is severely compromised and severely decreased blood cell numbers are observed across the myeloid, erythroid and lymphoid cell lineages. These studies show that cpsf1 is essential for HSCs survival and differentiation in the CHT.