FAXDC2 (fatty acid hydroxylase domain containing 2) is a member of the fatty acid hydroxylase superfamily. Given the important role of fatty acids in megakaryocytes, we have studied the role of this gene in the development of this lineage. Here we show that the expression of FAXDC2 is constantly elevated during megakaryocyte maturation. In contrast, FAXDC2 is significantly downregulated in acute myeloid leukemia and acute megakaryoblastic leukemia. Moreover, FAXDC2 overexpression promotes the differentiation of megakaryocytic cell lines and primary cells, whereas its knockdown disrupts their maturation. Mechanism study shows that FAXDC2 overexpression enhances extracellular signal-regulated kinase (ERK) signaling and increases RUNX1 (Runt-related transcription factor 1) expression. FAXDC2 also restores megakaryocytic differentiation in cells exposed to an ERK inhibitor or those expressing a dominant negative form of RUNX1. Finally, FAXDC2 overexpression leads to an increase in sphingolipid GM3 synthase, suggesting a potential role of FAXDC2 in lipid metabolism that increases ERK signaling and facilitates megakaryocyte differentiation. Together, these results show that FAXDC2 plays a novel role in development of megakaryocytes and its dysregulation may contribute to abnormal hematopoietic cell development in leukemia.