Many chimeric oncogenes have been identified by virtue of the association between chromosomal translocation and specific human leukemias. However, the biological mechanism by which these oncogenes disrupt the developmental program of normal human hematopoietic cells during the initiation of the leukemogenic process is poorly understood due to the absence of an appropriate experimental system to study their function. Here, we report that retroviral transduction of TLS-ERG, a myeloid leukemia-associated fusion gene, to human cord blood cells results in altered myeloid and arrested erythroid differentiation and a dramatic increase in the proliferative and self-renewal capacity of transduced myeloid progenitors. Thus, TLS-ERG expression alone induced a leukemogenic program that exhibited similarities to the human disease associated with this translocation. These results provide an experimental examination of the early stages of the human leukemogenic process induced by a single oncogene and establish a paradigm to functionally assay putative leukemogenic genes in normal human hematopoietic cells.