Iron-regulatory proteins (IRPs) 1 and 2 posttranscriptionally regulate expression of transferrin receptor (TfR), ferritin, and other iron metabolism proteins. Mice with targeted deletion of IRP2 overexpress ferritin and express abnormally low TfR levels in multiple tissues. Despite this misregulation, there are no apparent pathologic consequences in tissues such as the liver and kidney. However, in the central nervous system, evidence of abnormal iron metabolism in IRP2^-/- mice precedes the development of adult-onset progressive neurodegeneration, characterized by widespread axonal degeneration and neuronal loss. Here, we report that ablation of IRP2 results in iron-limited erythropoiesis. TfR expression in erythroid precursors of IRP2^-/- mice is reduced, and bone marrow iron stores are absent, even though transferrin saturation levels are normal. Marked overexpression of 5-aminolevulinic acid synthase 2 (Alas2) results from loss of IRP-dependent translational repression, and markedly increased levels of free protoporphyrin IX and zinc protoporphyrin are generated in IRP2^-/- erythroid cells. IRP2^-/- mice represent a new paradigm of genetic microcytic anemia. We postulate that IRP2 mutations or deletions may be a cause of refractory microcytic anemia and bone marrow iron depletion in patients with normal transferrin saturations, elevated serum ferritins, elevated red cell protoporphyrin IX levels, and adult-onset neurodegeneration.