Human Cytomegalovirus (HCMV) infection is a serious complication in hematopoietic stem cell transplant (HSCT) recipients due to virus-induced myelosuppression and impairment of stem cell engraftment. Despite the clear clinical link between myelosuppression and HCMV infection, little is known about the mechanism(s) by which the virus inhibits normal hematopoiesis because of the strict species specificity and the lack of surrogate animal models. In this study, we developed a novel humanized mouse model system that recapitulates the HCMV-mediated engraftment failure after hematopoietic cell transplantation. We observed significant alterations in the hematopoietic populations in peripheral lymphoid tissues following engraftment of a subset of HCMV+ CD34+ HPCs within the transplant suggesting that a small proportion of HCMV-infected CD34+ HPCs can profoundly affect HPC differentiation in the bone marrow microenvironment. This model will be instrumental to gain insight into the fundamental mechanisms of HCMV myelosuppression after HSCT and provides a platform to assess novel treatment strategies.