Proper control of inflammatory responses is essential for embryonic development, but the underlying mechanism is poorly understood. Here, we show that under physiological conditions, inactivation of ISG15, an inflammation amplifier, is associated with the interaction of Beclin 1 (Becn1), via its evolutionarily conserved domain, with STAT3 in the major fetal hematopoietic organ of mice. Conditional loss of Becn1 caused sequential dysfunction and exhaustion of fetal liver hematopoietic stem cells, leading to lethal inflammatory cell-biased hematopoiesis in the fetus. Molecularly, the absence of Becn1 resulted in the release of STAT3 from Becn1 tethering and subsequent phosphorylation and translocation to the nucleus, which in turn directly activated the transcription of ISG15 in fetal liver hematopoietic cells, coupled with increased ISGylation and production of inflammatory cytokines, whereas inactivating STAT3 reduced ISG15 transcription and inflammation but improved hematopoiesis potential, and further silencing ISG15 mitigated the above collapse in the Becn1-null hematopoietic lineage. The Becn1/STAT3/ISG15 axis remains functional in autophagy-disrupted fetal hematopoietic organs. These results suggest that Becn1, in an autophagy-independent manner, secures hematopoiesis and survival of the fetus by directly inhibiting STAT3/ISG15 activation to prevent cytokine storms. Our findings highlight a previously undocumented role of Becn1 in governing ISG15 to safeguard the fetus.