How hematopoietic stem cells (HSCs) coordinate their divisional axis and whether this orientation is important for stem cell–driven hematopoiesis is poorly understood. Single-cell RNA sequencing data from patients with Shwachman-Diamond syndrome (SDS), an inherited bone marrow failure syndrome, show that ARHGEF2, a RhoA-specific guanine nucleotide exchange factor and determinant of mitotic spindle orientation, is specifically downregulated in SDS hematopoietic stem and progenitor cells (HSPCs). We demonstrate that transplanted Arhgef2−/− fetal liver and bone marrow cells yield impaired hematopoietic recovery and a production deficit from long-term HSCs, phenotypes that are not the result of differences in numbers of transplanted HSCs, their cell cycle status, level of apoptosis, progenitor output, or homing ability. Notably, these defects are functionally restored in vivo by overexpression of ARHGEF2 or its downstream activated RHOA GTPase. By using live imaging of dividing HSPCs, we show an increased frequency of misoriented divisions in the absence of Arhgef2. ARHGEF2 knockdown in human HSCs also impairs their ability to regenerate hematopoiesis, culminating in significantly smaller xenografts. Together, these data demonstrate a conserved role for Arhgef2 in orienting HSPC division and suggest that HSCs may divide in certain orientations to establish hematopoiesis, the loss of which could contribute to HSC dysfunction in bone marrow failure.