Acute lymphoblastic and myeloblastic leukemias (ALL and AML) have been known to modify the bone marrow microenvironment and disrupt non-malignant hematopoiesis. However, the molecular mechanisms driving these alterations remain poorly defined. Using mouse models of ALL and AML, here we show that leukemic cells turn off lymphopoiesis and erythropoiesis shortly after colonizing the bone marrow. ALL and AML cells express lymphotoxin α1β2 and activate lymphotoxin beta receptor (LTβR) signaling in mesenchymal stem cells (MSCs), which turns off IL7 production and prevents non-malignant lymphopoiesis. We show that the DNA damage response pathway and CXCR4 signaling promote lymphotoxin α1β2 expression in leukemic cells. Genetic or pharmacological disruption of LTβR signaling in MSCs restores lymphopoiesis but not erythropoiesis, reduces leukemic cell growth, and significantly extends the survival of transplant recipients. Similarly, CXCR4 blocking also prevents leukemia-induced IL7 downregulation and inhibits leukemia growth. These studies demonstrate that acute leukemias exploit physiological mechanisms governing hematopoietic output as a strategy for gaining competitive advantage.