The leukemic oncogene Tel/PDGFRbeta, was inducibly expressed in embryonic stem (ES) cells and the phenotypic and molecular changes occurring during hematopoietic differentiation investigated. Expression of Tel/PDGFRbeta resulted in an inability of ES cells to self-renew and caused a significant increase in myelopoiesis with a corresponding decrease in erythropoiesis. Analysis of gene expression patterns indicated a dramatic alteration in the levels of genes associated with self-renewal and differentiation, especially myelomonocytic genes in Tel/PDGFRbeta-expressing cells. This study indicates Tel/PDGFRbeta drives myelopoiesis by altering expression of genes involved in hematopoiesis and demonstrates the potential of this stem cell system to study oncogene-induced pathogenesis.