In a previous gene expression profiling study of acute lymphoblastic leukemia (ALL), we identified a novel subtype of B-progenitor ALL (4.9% of 284 cases) with a unique gene expression profile, aberrant expression of CD2 and the absence of recurring cytogenetic abnormalities (Cancer Cell 2002; 1:133). Efforts to identify rearrangement or mutation of many of the top-ranked genes in the novel expression signature failed to identify a causative lesion. To further investigate the genetic basis of this subtype, we performed integrated genomic analysis of 277 ALL cases. Affymetrix 250k Sty and Nsp SNP microarrays were used in all cases, and Affymetrix U133A gene expression profiles were obtained on 183 of the cases. Unsupervised clustering of gene expression data identified 16 cases of the novel subtype, including all of the 14 previously defined cases. Remarkably, focal mono-allelic deletions of the ETS family member ERG (v-ets erythroblastosis virus E26 oncogene homolog) were detected by genome-wide copy number analysis in 11/16 (69%) of the novel cases, but not in any other ALL subtype. Extensive analysis failed to reveal evidence of translocations involving the altered ERG allele, indicating that these are intragenic deletions limited to ERG. The ERG deletions involved a subset of exons (ERG isoform 1 exons 3–7 or 3–9) resulting in the expression of internally deleted ERG transcripts with altered reading frames predicted to produce a prematurely truncated N-terminal protein fragment. However, using an alternative translational start site 5′ to exon 10, the transcripts also encode a ∼28kDa C-terminal ERG fragment that contains the entire C-terminal ETS DNA-binding and transactivation domains, but lacks all N-terminal domains. Importantly, western blot analysis of primary leukemic blasts revealed expression of only the 28kDa C-terminal ERG protein, along with full length ERG expressed from the retained wild type allele. Remarkably, the C-terminal ERG protein was also detected in 4 of 5 novel ALL cases that lacked detectable ERG deletions, but not in any other ALL subtype. In luciferase reporter assays, this aberrant ERG protein acts as a competitive inhibitor of wild type ERG. Analysis of a second cohort of 35 B-progenitor ALL cases lacking recurring cytogenetic abnormalities identified two cases with ERG deletions and a third expressing the aberrant ERG protein, all of which had the novel gene expression profile. Sequencing of ERG in 252 ALL cases identified only one case with an ERG mutation that resulted in a frameshift in the ETS domain. This case did not share the novel signature nor express the aberrant C-terminal ERG protein. Finally, in an analysis of 37 acute leukemia cell lines, the B-progenitor ALL line NALM-6 was found to harbor a focal, internally truncating ERG deletion, expressed the aberrant ERG protein, and shared the novel gene expression profile, thus identifying it as a model of this novel ALL subtype. These data establish focal ERG deletions as the genetic lesion underlying a novel subtype of ALL, and have expanded the genetic mechanisms that lead to the dysregulation of ERG from chromosomal translocations that result in enhanced transcriptional activity, to deletions that generate dominant negative forms of the transcription factor.