Dual specificity protein tyrosine phosphatase PRL-2 is overexpressed in pediatric acute myeloid leukemia (AML) and is located at human chromosome 1p35, a region often rearranged or amplified in malignant lymphoma and B-cell chronic lymphocytic leukemia (B-CLL). Little is known of the significance of PRL-2 expression in hematopoietic malignancies. Herein we demonstrated that ectopic expression of PRL-2 in murine pre-B-cell line Baf3ER and mouse bone marrow cells induced key features associated with malignant progression and metastasis. PRL-2-transfected Baf3ER cells had augmented growth responses to hematopoietic growth factors Epo or IL-3 with shortened cell cycle, reduced requirement (5x) for Epo in cell survival, increased cell migration (3x), reduced cell adhesion (5x), and conversion to an immature cell morphology in association with increased expression (3x) of stem cell marker Bmi-1. When transduced into mouse bone marrow cells, PRL-2 increased Epo-induced colony formation (4x) and gave rise to larger colonies. These observations provide evidences implicating PRL-2 as a pathogenic molecule in hematopoietic malignancies and suggest its potential as a novel therapeutic target.