A significant role of the microenvironment in leukemogenesis is beginning to emerge. The leukemia cell microenvironment consists of not only the stromal and endothelial cell components but also the normal hematopoietic cells. Signal transducer and activator of transcription 5 (STAT5) is a latent transcription factor that is normally transiently activated by phosphorylation in response to microenvironmental signals. In hematopoietic cells, persistently activated STAT5 via aberrant receptor signaling, Janus kinases (JAKs), or intracellular tyrosine kinases is a bona fide driver of leukemogenesis. However, active IL-7/STAT5 signaling also protects the early B-cell genome by suppressing error-prone recombination and vulnerability to transformation. Along these lines, we have reported that lymphocyte development from transplanted STAT5-deficient fetal liver cells was blocked at the pre-pro-B-cell stage but when combined with transgenic Myc and Bcl-2 promoted faster initiation of B-ALL. Furthermore, inflammatory responses may also be involved in leukemia initiation in both pediatric and adult patients which are associated with decreased phosphorylation of STAT5. Likewise, additional targeted agents continue to be developed for precision medicine that prominently suppress signaling pathways. A common theme of all of these perturbations is potential risk for dysregulating hematopoiesis through general transcriptional modulation. Here we discuss the potential for STAT5 inhibition as a double edged sword in certain hematologic disorders, such as early B-cell lymphoblastic leukemias. Considering the rapid pace of understanding of the pre-leukemic decrease in poly-clonality that precedes leukemia, the functional changes associated with microenvironmental influences are thus of potential clinical significance.