The Drosophila hematopoietic system is utilized in this study to gain novel insights into the process of growth control of the hematopoietic progenitor niche in blood development. The niche microenvironment is an essential component controlling the balance between progenitor populations and differentiated, mature blood cells and has been shown to lead to hematopoietic malignancies in humans when misregulated. MicroRNAs are one class of regulators associated with blood malignancies; however, there remains a relative paucity of information about the role of miRNAs in the niche. Here we demonstrate that bantam miRNA is endogenously active in the Drosophila hematopoietic progenitor niche, the posterior signaling center (PSC), and functions in the primary hematopoietic organ, the lymph gland, as a positive regulator of growth. Loss of bantam leads to a significant reduction in the PSC and overall lymph gland size, as well as a loss of the progenitor population and correlative premature differentiation of mature hemocytes. Interestingly, in addition to being essential for proper lymph gland development, we have determined bantam to be a novel upstream component of the insulin signaling cascade in the PSC and have unveiled dMyc as one factor central to bantam activity. These important findings identify bantam as a new hematopoietic regulator, place it in an evolutionarily conserved signaling pathway, present one way in which it is regulated, and provide a mechanism through which it facilitates cellular proliferation in the hematopoietic niche. (C) 2014 Elsevier Inc. All rights reserved.