MN1-TEL is the product of the recurrent t(12;22)(p12;q11) associated with human myeloid malignancies. MN1-TEL functions as an activated transcription factor, exhibiting weak transforming activity in NIH3T3 fibroblasts that depends on the presence of a functional TEL DNA-binding domain, the N-terminal transactivating sequences of MN1 and C-terminal sequences of MN1. We determined the transforming activity of MN1-TEL in mouse bone marrow (BM) by using retroviral transfer. MN1-TEL-transduced BM showed increased self-renewal capacity of primitive progenitors in vitro, and prolonged in vitro culture of MN1-TEL-expressing BM produced immortalized myeloid, interleukin (IL)-3/stem cell factor-dependent cell lines with a primitive morphology. Transplantation of such cell lines into lethally irradiated mice rescued them from irradiation-induced death and resulted in the contribution of MN1-TEL-expressing cells to all hematopoietic lineages, underscoring the primitive nature of these cells and their capacity to differentiate in vivo. Three months after transplantation, all mice succumbed to promonocytic leukemia. Transplantation of freshly MN1-TEL-transduced BM into lethally irradiated mice also caused acute myeloid leukemia within 3 months of transplantation. We infer that MN1-TEL is a hematopoietic oncogene that stimulates the growth of hematopoietic cells, but depends on secondary mutations to cause leukemia in mice.