The identification of cancer stem cells is a major step towards the understanding of the pathogenesis of solid and hematological neoplasias and might have direct implications for the development of innovative therapeutic strategies aiming at the eradication of the tumor propagating cell. Here we describe that acute myeloid leukemia (AML), induced by the CALM/AF10 fusion gene, is propagated by a transformed lymphoid progenitor in a murine bone marrow (BM) transplantation model of t(10;11)(p13;q14) positive AML. When mice were transplanted with BM cells retrovirally engineered to express the C/A fusion, all animals (n=13) died from AML showing DJ rearrangement of the heavy chain of the IgH locus after a median of 110 days post transplantation. Diseased mice showed an accumulation of myeloid Gr1+/Mac1+ cells in the peripheral blood and spleen and a multi-organ infiltration by myeloperoxidase and chloracetate esterase positive cells in immunohistochemical sections. In the leukemic mice only a minor population counting for 6.7 % (± 2.1) cells in the BM displayed the B220 lymphoid antigen and lacked myeloid markers (on average 9.4 % ± 3). The majority of cells expressed myeloid markers (on average 82.9 % (± 8.6) Mac1+ cells, 86.4 % (± 3.7) Gr-1+ cells). Additionally, in the leukemic mice an average of 26.0 % (± 8.6) and 32.5 % (± 13.2) of these cells co-expressed B220 and Mac1 or B220 and Gr1, respectively, compared to 2.1 % (± 0.7) and 1.3 % (± 0.3), respectively, in GFP controls. Importantly, in vitro only the B220+/Mac− cell population had growth potential at the single cell level (seeding efficiency 29 %) compared to the B220+/Mac+ (1%) and B220−/Mac+ cells (1%). When the frequency of leukemia propagating cells (LPC) of the three different populations isolated from primary leukemic mice was determined by limiting dilution transplantation and Poisson statistics the frequency of the LPC was more than 380 fold higher in the ‘B220+/Mac1−’ population (1 in 36 cells) than in the ‘Mac1+/B220−’ bulk population (1 in 13906 cells) and more than 12fold increased compared to the B220+/Mac+ cells (1 in 437 cells). In vitro a single B220+/Mac1− cell isolated from a leukemic mouse was able to give rise to the B220+/Mac1+ as well as the Mac1+/ B220− population, both populations showing the identical genomic DJ rearrangement at the IgH locus as the initial B220+/Mac1− cell, demonstrating its capacity to differentiate into the myeloid lineage at the single cell level. The B220+/Mac1− population displayed a CD43+/AA4.1+/HSA+/CD19−/IL-7R− phenotype, was promiscuous in its transcription profile with positivity for EBF, but also MPO and lacked Pax5. Taken together, this murine leukemia model indicates that AML can be propagated from an early transformed lymphoid progenitor cell. The transformation of an early lymphoid cell, which is re-directed into the myeloid lineage by appropriate oncogenes, could explain recurrent observations of immunoglobulin rearrangements in patients with AML and provide a rationale for therapies, aiming at the elimination of the leukemia propagating cell with lymphoid characteristics, but sparing normal HSCs.