The E2A-HLF fusion gene, generated by t(17;19)(q22;p13) in acute lymphoblastic leukemia (ALL), encodes a chimeric transcription factor in which the trans-activating domains of E2A are fused to the DNA-binding and dimerization domains of hepatic leukemic factor (HLF). To investigate its biological role, we generated transgenic mice expressing E2A-HLF using Ig enhancer and promoter, which direct transgene expression in cells committed to the lymphoid lineage. The transgenic mice exhibited abnormal development in the thymus and spleen and were susceptible to infection. The thymus contained small numbers of thymocytes, and TUNEL staining showed that higher population of thymocytes were undergoing apoptosis. The spleen exhibited a marked reduction in splenic lymphocytes and the flow cytometric analyses and the in vitro colony formation assays showed that the B-cell maturation was blocked at a very early developmental stage. These findings indicated that the expression of E2A-HLF induced T-cell apoptosis and B-cell maturation arrest in vivo and that the susceptibility of the transgenic mice to infection was due to immunodeficiency. Moreover, several transgenic mice developed acute leukemia, classified as T-ALL based on the surface marker analysis and DNA rearrangements, suggesting that an additional event is required for malignant transformation of lymphoid cells expressing E2A-HLF. Our findings provide insight into the biological function of E2A-HLF in lymphoid development and also its role in leukemogenesis.