Recent studies have implicated bone-lining osteoblasts as important regulators of hematopoietic stem cell (HSC) self-renewal and differentiation; however, because much of the evidence supporting this notion derives from indirect in vivo experiments, which are unavoidably complicated by the presence of other cell types within the complex bone marrow milieu, the sufficiency of osteoblasts in modulating HSC activity has remained controversial. To address this, we prospectively isolated mouse osteoblasts, using a novel flow cytometry-based approach, and directly tested their activity as HSC niche cells and their role in cyclophosphamide/granulocyte colony-stimulating factor (G-CSF)-induced HSC proliferation and mobilization. We found that osteoblasts expand rapidly after cyclophosphamide/G-CSF treatment and exhibit phenotypic and functional changes that directly influence HSC proliferation and maintenance of reconstituting potential. Effects of mobilization on osteoblast number and function depend on the function of ataxia telangiectasia mutated (ATM), the product of the Atm gene, demonstrating a new role for ATM in stem cell niche activity. These studies demonstrate that signals from osteoblasts can directly initiate and modulate HSC proliferation in the context of mobilization. This work also establishes that direct interaction with osteolineage niche cells, in the absence of additional environmental inputs, is sufficient to modulate stem cell activity.