The core-binding factor (CBF)-associated leukemia fusion protein CBFbeta-SMMHC impairs myeloid and lymphoid differentiation. By inhibiting RUNX function, the fusion oncoprotein predisposes specifically to acute myeloid leukemia in both patients and mouse models. We have shown that Cbfbeta-SMMHC expression leads to a sustained reduction of circulating B lymphocytes in the mouse. In this study, we demonstrate that the activation of Cbfbeta-SMMHC reduces pre-pro-B cells approximately 3-fold and pre-B cells more than 10-fold and that this differentiation block is cell-autonomous. The reduction of pre-pro-B cells coincided with an increase in apoptosis in this population. The number of common lymphoid progenitors (CLPs) were not affected; however, the expression of critical early B-cell factors Ebf1, Tcfe2a, and Pax5 was significantly reduced. In addition, Cbfbeta-SMMHC reduced Rag1 and Rag2 expression and impaired V(D)J recombination in the CLPs. Furthermore, CLPs expressing Cbfbeta-SMMHC also show inhibition of B cell-specific genes Cd79a, Igll1, VpreB1, and Blk. These results demonstrate that CBF/RUNX function is essential for the function of CLPs, the survival of pre-pro-B cells, and the establishment of a B lineage-specific transcriptional program. This study also provides a mechanistic basis for the myeloid-lineage bias of CBFbeta-SMMHC-associated leukemia.