The erythroid defect in Diamond Blackfan anemia (DBA) is known to be intrinsic to the stem cell, but its molecular pathophysiology remains obscure. Using a 2-phase liquid erythroid culture system, we have demonstrated a consistent defect in DBA, regardless of clinical severity, including 3 first-degree relatives with normal hemoglobin levels but increased erythrocyte adenosine deaminase activity. DBA cultures were indistinguishable from controls until the end of erythropoietin (Epo)–free phase 1, but failed to demonstrate the normal synchronized wave of erythroid expansion and terminal differentiation on exposure to Epo. Dexamethasone increased Epo sensitivity of erythroid progenitor cells, and enhanced erythroid expansion in phase 2 in both normal and DBA cultures. In DBA cultures treated with dexamethasone, Epo sensitivity was comparable to normal, but erythroid expansion remained subnormal. In clonogenic phase 2 cultures, the number of colonies did not significantly differ between normal cultures and DBA, in the presence or absence of dexamethasone, and at both low and high Epo concentrations. However, colonies were markedly smaller in DBA under all conditions. This suggests that the Epo-triggered onset of terminal maturation is intact in DBA, and the defect lies down-stream of the Epo receptor, influencing survival and/or proliferation of erythroid progenitors.