Diamond-Blackfan anemia (DBA), a congenital erythroblastopenia, is a model disease for the study of erythroid differentiation but is poorly understood. RPS19 is the only gene yet to have been associated with DBA, but its relevance to erythroid differentiation is unclear. The molecular basis for the stimulation of erythropoiesis by glucocorticoids in patients with DBA has not been identified. We demonstrate that targeted degradation of the RPS19 transcript, through retroviral expression of short hairpin RNAs (shRNAs), blocks the proliferation and differentiation of erythroid progenitor cells in cultured human CD34(+) cells. Treatment of RPS19-deficient cells with dexamethasone restores erythroid differentiation to normal levels. We investigated the molecular basis of pharmacologic therapies for DBA using oligonucleotide microarrays to survey gene expression in CD34(+) cells treated with combinations of dexamethasone, erythropoietin, stem cell factor, and interleukin-3. Dexamethasone did not alter expression of RPS19 but activated a genetic program that includes a set of key hematopoietic regulatory genes. Genes specific to erythroid progenitor cells were up-regulated by dexamethasone, while genes specific to nonerythroid lineages were down-regulated. Deficiency of RPS19 therefore blocks proliferation of immature erythroid progenitor cells, and dexamethasone activates proliferation of the same cell population through mechanisms independent of RPS19.