TEL-AML1 (ETV6-RUNX1) fusion is the product of the t(12;21) chromosomal translocation, the most common chromosomal rearrangement in childhood cancer. The translocation fuses two highly conserved transcription factors, TEL and AML1 that have essential roles in hematopoiesis. Genetic studies of identical twins with concordant leukemia, the detection of leukemia-specific fusion genes in neonatal blood spots, and the existence of multiple leukemic subclones at ALL diagnosis point to prenatal origin of the fusion and long latency before leukemia development. Additionally, a study in growth factor-dependent cell lines and transgenic mice, and several mouse transplant models suggest that TEL-AML1 is insufficient by itself for leukemic transformation. To determine whether TEL-AML1 has selective transforming impact on a particular stem cell lineage, we established stable zebrafish transgenic lines expressing the TEL-AML1 fusion protein both constitutively, and within the lymphoid progenitors. In these lines, either the zebrafish β-actin (ZBA) promoter or the xenopus elongation factor-1 (XEF1) promoter drives TEL-AML1 expression constitutively, while the zebrafish RAG-2 promoter (RAG2) selectively drives TEL-AML1 expression in committed lymphocyte precursors, but not in earlier multilineage hematopoietic precursors. TEL-AML1 expression, alone or fused to EGFP, was detected at 24-hour post fertilization (hpf) with fluorescent microscopy or RT-PCR and confirmed with western blot analysis. In-Situ Hybridization and confocal microscopy revealed that transgenic zebrafish maintained TEL-AML1 expression throughout adulthood. The expression of TEL-AML1 was associated with accumulation of immature hematopoietic progenitor cells, mostly in the kidney and spleen of several transgenic zebrafish lines, within a few weeks of development, indicating an expansion of the progenitor cell population. To date, a small number (5 out of 391 transgenic fish; 1.3%) of founders and progeny of zebrafish transgenic for ZBA- or XEF1-TEL-AML1 fusion developed an infiltrating lymphoid neoplasm, most likely acute lymphoblastic leukemia with a latency of 8–12 month. The lymphoblasts were negative for myeloperoxidase and PAS staining, with abundant expression of both EGFP in lymphoblasts from EGFP-TEL-AML1 line, and pre-B-cell leukemia transcription factor-1 (PBX1; also called cALLa) indicating that Leukemias originated in a TEL-AML1 expressing cell(s), and mimic the human CD10-positive precursor-B cell ALL. None of 350 wild-type, 125 control EGFP fish or 353 RAG2-TEL-AML1 transgenic zebrafish had any leukemia or hematopoietic changes. Therefore, the expression of TEL-AML1 fusion in our ZBA- and XEF1-TEL-AML1 transgenic lines generates a premalignant state, which appears to require additional genetic events for acquisition of the leukemic phenotype. The fact that none of the RAG2 zebrafish expressing TEL-AML1 in committed lymphoid progenitors developed leukemia or progenitor expansion indicates that the leukemic stem cell associated with TEL-AML1 leukemia is an immature progenitor earlier than the committed lymphoid progenitors where RAG2 expression is detected. The TEL-AML1 transgenic zebrafish lines provide a basis for large scale and targeted mutagenesis screens aimed at identifying mutations and cooperating events that are required for TEL-AML1 induced leukemias.