Hox (homeobox) genes are known to be key regulators of development and haematopoiesis and several have also been implicated in leukaemogenesis. Overexpression of HoxA5 in human haematopoietic progenitors leads to an increase in myelopoiesis, suggesting a role for this hox gene during induction of myeloid differentiation. Inactivation of genes by CpG island DNA methylation is known to be important in the development and progression of leukaemia, and inhibitors of DNA methylation are currently of great interest as novel therapeutics for a number of haematopoietic malignancies. Here we show that in peripheral blood from healthy volunteers HoxA5 exhibits methylation of 50% of alleles across an extensive CpG island covering the promoter region/1st exon of HoxA5. In patients with chronic myeloid leukaemia, 33% (15/45 patients) exhibited increased methylation of HoxA5 (80–100% of alleles methylated) in the chronic phase of the disease. However, such hypermethylation of HoxA5 was invariably present in samples from patients in myeloid blast crisis (15/15 patients). In contrast, patients in lymphoid blast crisis did not exhibit increased levels of hypermethylation. Analysis of patients in chronic phase demonstrated a statistically significant correlation (p < 0.006) between hypermethylation of the HoxA5 gene and other prognostic factors associated with high risk of progression to blast crisis (high Hasford/Sokal score, incomplete response to Imatinib, known early progression, del 9), suggesting that methylation of HoxA5 may be a clinically useful prognostic indicator. The results are also compatible with a direct role for hypermethylation of HoxA5, and consequent loss of HoxA5 expression, in inhibition of myeloid differentiation during progression to blast crisis and implicate HoxA5 as a therapeutic target for inhibitors of DNA methylation in the treatment of leukaemia.