Ex vivo activation and cell cycle progression of hematopoietic stem and progenitor cells (HSPCs) is a prerequisite to reaching adequate levels of genetic engineering by homology-driven repair (HDR) for clinical applications. Here, we show that shortening ex vivo culture mitigates the p53-mediated DNA damage response initiated by the concomitant exposure to nuclease and template delivery vectors and endows edited HSPCs with greater hematopoietic reconstitution capacity upon transplantation. However, this comes at the cost of a lower HDR-mediated gene correction, rendering ex vivo culture an unavoidable step, although detrimental. Mechanistically, we uncovered that ex vivo activation triggers a p38 MAPK-mitogenic ROS axis that fuels proliferation stress and heightens DNA damage burden across HSPC subsets. p38 inhibition prior to genetic engineering delayed G1/S transition, expanded transcriptionally-defined hematopoietic stem cells (HSCs), and increased multi-lineage output at single-cell resolution. Accordingly, in vivo analyses coupled with clonal tracking revealed superior engraftment, persistence throughout serial transplantation, and enhanced polyclonal repertoire of p38 inhibitor-treated gene-edited HSPCs. Altogether, our data point to proliferative stress as a driver of human HSPC dysfunction with fundamental implications for advancing precise gene correction into clinical practice.