Translocation of the ETO gene on human chromosome 8 with the AML1 gene on chromosome 21 (AML1-ETO) is a recurrent cytogenetic abnormality associated with approximately 12% of acute myelogenous leukemia (AML) cases. To understand the contribution of the t(8;21) to AML, we transduced purified hematopoietic stem cells (HSC) with a retroviral vector that coexpressed AML1-ETO or just the AML1 portion (AML1d) of the translocation along with a green fluorescent protein reporter gene. Animals reconstituted with AML1-ETO-expressing cells exhibited many of the hematopoietic developmental abnormalities seen in the bone marrow of human patients with the t(8;21), although the animals did not develop acute leukemia. We noted a gradual increase in primitive myeloblasts that accounted for approximately 10% of bone marrow by 10 months posttransplant. Consistent with this observation was a 50-fold increase in myeloid colony-forming cells in vitro. In addition, accumulation of late stage metamyelocytes was observed in bone marrow along with an increase in immature eosinophil myelocytes that showed abnormal basophilic granulation. There was also a gradual increase in both the frequency and absolute number of AML1-ETO-expressing HSC so that by 10 months posttransplant, there were 29-fold greater HSC numbers than in transplant-matched control mice. These phenotypes were not observed in animals reconstituted with cells expressing only the DNA-binding domain of AML1, suggesting that the ETO domain is necessary to establish the developmental abnormalities associated with AML1-ETO expression in HSC.