The efficient treatment of hematological malignancies as Acute Myeloid Leukemia, myelofibrosis and Chronic Myeloid Leukemia, requires the elimination of cancer-initiating cells and the prevention of disease relapse through targeting pathways that stimulate generation and maintenance of these cells. In mammals, inhibition of Smoothened, the key mediator of the Hedgehog signaling pathway, reduces Chronic Myeloid Leukemia progression and propagation. These findings make Smo a candidate target to inhibit maintenance of leukemia-initiating cells. In Drosophila melanogaster the same pathway maintains the hematopoietic precursor cells of the lymph gland, the hematopoietic organ that develops in the larva. Using Drosophila as an in vivo model, we investigated the mode of action of PF-04449913, a small-molecule inhibitor of the human Smo protein. Drosophila larvae fed with PF-04449913 showed traits of altered hematopoietic homeostasis. These include the development of melanotic nodules, increase of circulating hemocytes, the size increase of the lymph gland and accelerated differentiation of blood cells likely due to the exit of multi-potent precursors from quiescence. Importantly, the Smo inhibition can lead to the complete loss of hematopoietic precursors. We conclude that PF-04449913 inhibits Drosophila Smo blocking the Hh signaling pathway and causing the loss of hematopoietic precursor cells. Interestingly, this is the effect expected in patients treated with PF-04449913: number decrease of cancer initiating cells in the bone marrow to reduce the risk of leukemia relapse. Altogether our results indicate that Drosophila comprises a model system for the in vivo study of molecules that target evolutionary conserved pathways implicated in human hematological malignancies.