While the nucleoporin 98-retinoic acid receptor gamma (NUP98-RARG) is the first RARG fusion protein found in acute leukemia, its roles and the molecular basis in oncogenic transformation are currently unknown. Here, we showed that homodimeric NUP98-RARG not only acquired unique nuclear localization pattern and ability of recruiting both RXRA and wild-type NUP98, but also exhibited similar transcriptional properties as RARA fusions found in acute promyelocytic leukemia (APL). Using murine bone marrow retroviral transduction/transformation assay, we further demonstrated that NUP98-RARG fusion protein had gained transformation ability of primary hematopoietic stem/progenitor cells, which was critically dependent on the C-terminal GLFG domain of NUP98 and the DNA binding domain (DBD) of RARG. In contrast to other NUP98 fusions, cells transformed by the NUP98-RARG fusion were extremely sensitive to all-trans retinoic acid (ATRA) treatment. Interestingly, while pan-RXR agonists, SR11237 and LGD1069 could specifically inhibit NUP98-RARG transformed cells, mutation of the RXR interaction domain in NUP98-RARG had little effect on its transformation, revealing that therapeutic functions of rexinoid can be independent of the direct biochemical interaction between RXR and the fusion. Together, these results indicate that deregulation of the retinoid/rexinoid signaling pathway has a major role and may represent a potential therapeutic target for NUP98-RARG-mediated transformation.