ABSTRACT Appropriate diversification of cellular lineages from multi-potent progenitors is essential for normal development and homeostasis. The specification of erythroid and megakaryocytic lineages represents an especially vital developmental event whose molecular regulation remains incompletely defined. We now demonstrate the role of Rgs18, a GTPase-activating protein and transcriptional target of the repressor Gfi1b, in regulating these processes in mouse and human cells. Gfi1b stringently represses Rgs18 expression in erythroid cells, whereas, during megakaryocytic differentiation, declining Gfi1b levels facilitate a robust induction of Rgs18. Concordantly, alterations in Rgs18 expression produce disparate outcomes by augmenting megakaryocytic and potently suppressing erythroid differentiation and vice versa. These phenotypes reflect the differential impact of Rgs18 on signaling through p38 MAPK family proteins, and ERK1 and ERK2 (also known as MAPK3 and MAPK1, respectively) in the two lineages, which in turn alter the balance between the mutually antagonistic transcription factors Fli1 and Klf1. Overall, these results identify Rgs18 as a new and crucial effector of Gfi1b that regulates downstream signaling and gene expression programs to orchestrate erythro-megakaryocytic lineage choices. This dual role of Rgs18 in reciprocally regulating divergent lineages could exemplify generic mechanisms characteristic of multiple family members in different contexts.