Degeneration of normal hematopoietic cells is a shared feature of malignant diseases in the hematopoietic system. Previous studies have shown the exhaustion of hematopoietic progenitor cells (HPCs) in leukemic marrow, whereas hematopoietic stem cells (HSCs) remain functional upon relocation to non-leukemic marrow. However, the underlying cellular mechanisms, especially the specific niche components that are responsible for the degeneration of HPCs, are unknown. In this study, we focused on murine bone mesenchymal stem cells (MSCs) and their supporting function for normal hematopoietic cells in Notch1-induced acute T-cell lymphocytic leukemia (T-ALL) mice. We demonstrate that the proliferative capability and differentiation potential of T-ALL MSCs were impaired due to accelerated cellular senescence. RNA-seq analysis revealed significant transcriptional alterations in leukemic MSCs. After co-cultured with the MSCs from T-ALL mice, a specific inhibitory effect on HPCs was defined, whereas in vivo repopulating potential of normal HSCs was not compromised. Furthermore, osteoprotegerin was identified as a cytokine to improve the function of T-ALL MSCs and to enhance normal HPC output via the p38/ERK pathway. Therefore, this study reveals a novel cellular mechanism underlying the inhibition of HPC generation in T-ALL. Leukemic MSCs may serve as a cellular target for improving normal hematopoietic regeneration therapeutically.