The MRE11 DNA nuclease plays central roles in the repair of DNA double-strand breaks (DSBs) as a core component of the heterotrimeric MRE11/RAD50/NBS1 (MRN) complex. MRN localizes to chromosomal DSBs and recruits and activates the apical DSB repair protein kinase, ATM, which phosphorylates downstream substrates to elicit cellular DNA damage responses. Pathogenic variants in MRE11 cause the genome instability disorder ataxia-telangiectasia-like disorder (ATLD). The first ATLD patient allele identified, ATLD1, is a nonsense mutation that deletes 76 amino acids from the MRE11 C-terminus and results in markedly reduced levels of MRE11-ATLD1 and the entire MRN complex. This region of the C-terminus has been demonstrated to function in DNA binding, mediate functional protein interactions, and undergo post-translational modifications that regulate MRE11 nucleolytic activities. We previously demonstrated that transgenic mice expressing low wildtype MRN exhibit severe phenotypes, including small body size, anemia, and cellular DNA DSB repair defects. Thus, it is currently unknown whether reduced MRE11-ATLD1 and MRN levels, loss of the C-terminus, or both cause disease-associated phenotypes. In this study, we generated transgenic mouse models that express near endogenous or significantly reduced levels of MRE11-ATLD1 to determine the in vivo importance of the MRE11 C-terminus. We observe that reduced MRE11-ATLD1 expression leads to anemia, bone marrow failure, extramedullary hematopoiesis, and impaired lymphocyte development, similar to mice expressing low wildtype MRE11. In contrast, higher expression of MRE11-ATLD1 results in a subset of moderate phenotypes, indicating that loss of C-terminus has limited impact on MRN functions in vivo. These findings have implications for clinical predictions of ATLD patients harboring pathogenic MRE11 variants that impair MRE11 function and/or impact MRN protein levels.