Pbx1, a homeodomain transcription factor that was originally identified as the product of a proto-oncogene in acute pre-B-cell leukemia, is a global regulator of embryonic development. However, embryonic lethality in its absence has prevented an assessment of its role in B-cell development. Here, using Rag1-deficient blastocyst complementation assays, we demonstrate that Pbx1 null embryonic stem (ES) cells fail to generate common lymphoid progenitors (CLPs) resulting in a complete lack of B and NK cells, and a partial impairment of T-cell development in chimeric mice. A critical role for Pbx1 was confirmed by rescue of B-cell development from CLPs following restoration of its expression in Pbx1-deficient ES cells. In adoptive transfer experiments, B-cell development from Pbx1-deficient fetal liver cells was also severely compromised, but not erased, since transient B lymphopoiesis was detected in Rag-deficient recipients. Conditional inactivation of Pbx1 in pro-B (CD19(+)) cells and thereafter revealed that Pbx1 is not necessary for B-cell development to proceed from the pro-B-cell stage. Thus, Pbx1 critically functions at a stage between hematopoietic stem cell development and B-cell commitment and, therefore, is one of the earliest-acting transcription factors that regulate de novo B-lineage lymphopoiesis.