Cell-type specific transcriptional programs are regulated by the activity of tissue-specific transcription factors and enhancer elements within structurally defined topologically associating domains (TADs). The coordinated and dynamic changes in chromatin architecture are highly regulated as transcriptional output is influenced by chromatin accessibility, histone modification, promoter enhance interactions, and recruitment of transcriptional co-activator complexes. The genes which contribute to transcriptional regulation, including members of the cohesin complex, are frequently mutated in human cancers, including leukemias, Ewing sarcoma, and glioblastoma multiforme. Despite this, the mechanistic role of STAG2 in gene regulation, hematopoietic function, and tumor suppression has not been delineated. We show that somatic Stag2 deletion in hematopoietic stem/progenitor cells (HSPC) results in altered hematopoietic function, increased self-renewal, and impaired differentiation across all three lineages consistent with myelodysplasia. Chromatin immunoprecipitation sequencing of Stag2-deficient HSPCs revealed that Stag2 and Stag1 have both shared and non-redundant cistromes with Stag1/2 common binding sites enriching at TAD boundaries with CTCF occupancy. This maintains TAD integrity in the setting of Stag2 loss of function which we confirmed with Hi-C chromosome capture. High resolution of the Hi-C data at 10kB resolution identified a specific role for Stag2, but not Stag1, in maintaining short-range chromatin interactions, specifically at genes with PU.1 and IRF8 motifs. While co-deletion of Stag2 and Stag1 resulted in synthetic lethality, Stag2 loss alone resulted in decreased chromatin accessibility and reduced transcriptional output at key PU.1 target loci involved in lineage-specification, including reduced Ebf1 and Pax5 expression resulting in impaired B-lineage differentiation. We investigated whether expression of PU.1 could overcome the non-permissive chromatin state at these key downstream targets and rescue hematopoietic differentiation; however, PU.1 expression could not restore Ebf1 expression or B cell differentiation and did not attenuate the serial replating capacity of Stag2 deficient hematopoietic stem/progenitor cells (HSPCs). Given this transcriptional "choke-point" we investigated whether expression of Ebf1 would have a more significant impact on Stag2 deficient cells. Indeed Ebf1 rescue restored B cell colony formation/differentiation in vitro and in vivo and abrogated serial replating of Stag2 deficient HSPCs. These data highlight the non-hierarchical and non-redundant relationship between transcription factors and chromatin architecture and demonstrate a key role for Stag2-regulated local interactions in transcription factor output and hematopoietic differentiation. Nonetheless, the mechanistic underpinnings of the structural basis for transcriptional regulation remain associative. We have recently been able to reduce the cell input for Hi-C assays such that we can now analyze the chromatin architecture of purified populations and model the structural transition from Lin- Sca-1+ Kit+ hematopoietic stem cells to committed granulocyte macrophage precursor cells both in normal hematopoiesis and in the Stag2 deficient setting. Previous studies using in vitro systems have shown that complete cohesin depletion results in the loss of structural loop components; however, cohesin levels are reduced, but not absent, in cancer cells. As such, our studies highlight a key role for locus-specific alterations in gene regulation and DNA interactions in Stag2 deficient cells, which results in altered gene expression and contributes to transformation. Taken together, these data identify a key role for Stag2 loss in transcriptional dysregulation distinct from its shared role with Stag1 in chromosomal segregation. Moreover, we illustrate a critical link between cohesin, chromosomal contacts, and gene regulation that contributes to hematopoietic transformation. Disclosures Viny: Mission Bio: Other: Sponsored travel; Hematology News: Membership on an entity's Board of Directors or advisory committees. Dekker:Arima Genomics: Membership on an entity's Board of Directors or advisory committees. Levine:Imago Biosciences: Membership on an entity's Board of Directors or advisory committees; Amgen: Honoraria; Lilly: Honoraria; Gilead: Consultancy; Novartis: Consultancy; Prelude Therapeutics: Research Funding; Roche: Consultancy, Research Funding; Celgene: Consultancy, Research Funding; C4 Therapeutics: Membership on an entity's Board of Directors or advisory committees; Isoplexis: Membership on an entity's Board of Directors or advisory committees; Qiagen: Membership on an entity's Board of Directors or advisory committees; Loxo: Membership on an entity's Board of Directors or advisory committees.