Stem cells typically reside in a specialized physical and biochemical environment that facilitates regulation of their behavior. For this reason, stem cells are ideally studied in contexts that maintain this precisely constructed microenvironment while still allowing for live imaging. Here, we describe a long-term organ culture and imaging strategy for hematopoiesis in flies that takes advantage of powerful genetic and transgenic tools available in this system. We find that fly blood progenitors undergo symmetric cell divisions and that their division is both linked to cell size and is spatially oriented. Using quantitative imaging to simultaneously track markers for stemness and differentiation in progenitors, we identify two types of differentiation that exhibit distinct kinetics. Moreover, we find that infection-induced activation of hematopoiesis occurs through modulation of the kinetics of cell differentiation. Overall, our results show that even subtle shifts in proliferation and differentiation kinetics can have large and aggregate effects to transform blood progenitors from a quiescent to an activated state.