Pax-5 codes for the transcription factor BSAP which is expressed in all B-lymphoid tissues in addition to the developing central nervous system and testis. Within the B-lymphoid lineage, Pax-5 expression is already detected in the earliest B cell progenitors and persists up to the mature B cell stage. Targeted inactivation of the Pax-5 gene in the mouse germline revealed a differential dependency of fetal and adult B-lymphopoiesis on this transcription factor. Pax-5 is required for the differentiation of the earliest B-lineage-committed precursor cells in the fetal liver. In contrast, B cell development in the adult bone marrow progresses up to an early pro-B cell stage in the absence of Pax-5 function. The expression of CD19, Ig alpha (mb-1) and N-myc is severely reduced in Pax-5-deficient pro-B cells. These BSAP target genes are, however, unlikely to explain the early developmental block based on their known function in B cell development. Moreover, VH-to-DHJH rearrangements at the immunoglobulin heavy-chain locus are approximately 50-fold reduced in Pax-5-deficient pro B-cells, while the DH-to-JH rearrangements occur at a normal frequency. However, the expression of rearranged mu heavy-chain transgenes does not allow Pax-5-deficient pro-B cells to develop further to the pre-B cell stage. Together these data demonstrate therefore that B cell development in the Pax-5 deficient bone marrow is arrested at an early pro-B cell stage which is not yet responsive to pre-B cell receptor signaling.