Chronic Myeloid Leukaemia (CML) is initiated and maintained by the tyrosine kinase BCR-ABL. ABL-specific tyrosine kinase inhibitors (TKIs), whilst effective against mature CML cells, induce little apoptosis in stem/progenitor cells. However, in stem/progenitor cells TKIs exert potent anti-proliferative effects through a poorly understood mechanism. We showed that in CD34(+) CML cells FOXO1, 3a and 4 (FOXOs) were phosphorylated, predominantly cytoplasmic and inactive, consequent to BCR-ABL expression. TKIs decreased phosphorylation of FOXOs, leading to their re-localisation from cytoplasm (inactive) to nucleus (active), thus inducing G1 arrest. Of key importance, despite BCR-ABL activity, primitive quiescent CML stem cells showed low levels of FOXO phosphorylation and predominant nuclear localisation, resembling the pattern in normal stem cells. These results demonstrate for the first time that TKI-induced G1 arrest in CML progenitor cells is mediated by re-activation of FOXOs, whilst quiescence of CML stem cells is regulated by sustained FOXO activity. These data contribute to our understanding of CML stem cell quiescence and TKI activity, suggesting new strategies to target CML stem/progenitor cells by preventing or reversing this effect.