Gfi1 transcriptionally governs hematopoiesis, and its mutations produce neutropenia. In an effort to identify Gfi1-interacting proteins and also to generate new candidate genes causing neutropenia, we performed a yeast two-hybrid screen with Gfi1. Among other Gfi1-interacting proteins, we identified a previously uncharacterized member of the PR domain-containing family of tumor suppressors, PRDM5. PRDM5 has 16 zinc fingers, and we show that it acts as a sequence-specific, DNA binding transcription factor that targets hematopoiesis-associated protein-coding and microRNA genes, including many that are also targets of Gfi1. PRDM5 epigenetically regulates transcription similarly to Gfi1: it recruits the histone methyltransferase G9a and class I histone deacetylases to its target gene promoters and demonstrates repressor activity on synthetic reporters; on endogenous target genes, however, it functions as an activator, in addition to a repressor. Interestingly, genes that PRDM5 activates, as opposed to those it represses, are also targets of Gfi1, suggesting a competitive mechanism through which two repressors could cooperate in order to become transcriptional activators. In neutropenic patients, we identified PRDM5 protein sequence variants perturbing transcriptional function, suggesting a potentially important role in hematopoiesis.