Abstract Expression of the homeobox fusion gene E2A-PBX1 under control of the immunoglobulin heavy chain enhancer efficiently induced malignancies in transgenic mice. All animals died before 5 months of age with lymphomas that demonstrated phenotypes consistent with transitional intermediate thymocytes (CD4 +/CD8 +/CD3 med). E2A-PBX1 also markedly altered lymphoid development in pretumorous animals, reducing the number of thymocytes and bone marrow B lineage progenitors to 20% of normal levels. In spite of the observed reductions in lymphoid cells, premalignant animals contained significantly increased numbers of cycling thymocytes, but a higher proportion was also undergoing apoptosis, suggesting that increased cell death resulted in the marked lymphopenias. These data indicate that the chimeric homeodomain protein E2A-PBX1 paradoxically induces both proliferation and apoptosis in lymphoid cells, suggesting an in vivo association between nuclear oncogene-induced cell cycle progression and programed cell death.