Mitogen-activated protein kinases (MAPKs) are inactivated by dual-specificity phosphatases (DUSPs), the activities of which are tightly regulated during cell differentiation. Using knockdown screening and single-cell transcriptional analysis, we demonstrate that DUSP4 is the phosphatase that specifically inactivates p38 kinase to promote megakaryocyte (Mk) differentiation. Mechanistically, PRMT1-mediated methylation of DUSP4 triggers its ubiquitinylation by an E3 ligase HUWE1. Interestingly, the mechanistic axis of the DUSP4 degradation and p38 activation is also associated with a transcriptional signature of immune activation in Mk cells. In the context of thrombocytopenia observed in myelodysplastic syndrome (MDS), we demonstrate that high levels of p38 MAPK and PRMT1 are associated with low platelet counts and adverse prognosis, while pharmacological inhibition of p38 MAPK or PRMT1 stimulates megakaryopoiesis. These findings provide mechanistic insights into the role of the PRMT1-DUSP4-p38 axis on Mk differentiation and present a strategy for treatment of thrombocytopenia associated with MDS.