NUP98 has been involved in multiple recurrent chromosome rearrangements in leukemia. We identified a novel fusion between NUP98 and IQ motif containing G (IQCG) gene from a de novo acute T-lymphoid/myeloid leukemia harboring t(3;11)(q29q13;p15)del(3)(q29). IQCG has two putative coiled-coil domains and one IQ domain. The FG repeat from NUP98 and the coiled-coil domain from IQCG were retained in the fusion protein. We demonstrated that NUP98-IQCG could form homodimer, heterodimerize with NUP98 or IQCG, bind co-activators and/or co-repressors, and show transcriptional activity in vitro. Expression of NUP98-IQCG inhibited 32Dcl3 cell apoptosis induced by Ara-C, and partially blocked granulocyte differentiation induced by G-CSF. Colony-forming assay and serial replating assays indicated that NUP98-IQCG was able to stimulate proliferation, partially block differentiation of hematopoietic stem/progenitor cells but was unable to confer transformation alone. Taken together, our data indicate that newly identified NUP98-IQCG fusion protein may play an essential role in leukemogenesis, but by itself may not be sufficient to induce leukemia.