One-quarter of pediatric pre-B-cell leukemias contain the t(1;19) chromosomal translocation, which fuses 5' exons encoding the transactivation domain of the E2A transcription factor gene to 3' exons ecoding the putative DNA-binding region of the unusual homeobox gene, PBX1. To test the leukemic potential of this fused gene, a cDNA encoding its major protein product, p85E2A-Pbx1, was incorporated into a retrovirus construct and introduced into normal mouse marrow progenitors by infection. The cells were used in a bone marrow transplantation protocol to reconstitute the hematopoietic compartments of lethally irradiated recipients. After 3 to 8 months, reconstituted mice developed acute myeloid leukemias that expressed high levels of p85^E2A-Pbx1 and were readily transmissible to immunocompetent mice. Most acute myeloid leukemias also grew as granulocytic sarcomas and exhibited some neutrophilic differentiation. These results demonstrate a causative role for p85^E2A-Pbx1 in human acute leukemia and indicate that the oncogenic potential of Pbx1 is not limited to pre-B-cell malignancies.