Production of red blood cells relies on proper mitochondrial function, both for their increased energy demands during differentiation and for proper heme and iron homeostasis. Mutations in genes regulating mitochondrial function have been reported in patients with anemia, yet their pathophysiological role often remains unclear. PGC1β is a critical coactivator of mitochondrial biogenesis, with increased expression during terminal erythroid differentiation. The role of PGC1β has however mainly been studied in skeletal muscle, adipose and hepatic tissues, and its function in erythropoiesis remains largely unknown. Here we show that perturbed PGC1β expression in human hematopoietic stem/progenitor cells from both bone marrow and cord blood results in impaired formation of early erythroid progenitors and delayed terminal erythroid differentiation in vitro, with accumulations of polychromatic erythroblasts, similar to MDS-related refractory anemia. Reduced levels of PGC1β resulted in deregulated expression of iron, heme and globin related genes in polychromatic erythroblasts, and reduced hemoglobin content in the more mature bone marrow derived reticulocytes. Furthermore, PGC1β knock-down resulted in disturbed cell cycle exit with accumulation of erythroblasts in S-phase and enhanced expression of G1-S regulating genes, with smaller reticulocytes as a result. Taken together, we demonstrate that PGC1β is directly involved in production of hemoglobin and regulation of G1-S transition and is ultimately required for proper terminal erythroid differentiation.