The transcription factor Pax5 is a master regulator of B cell commitment, orchestrating the expression of a broad network of genes to drive B cell differentiation1 . Recent genome-wide copy number analyses of pediatric B progenitor acute lymphoblastic leukemia (B-ALL) have identified recurrent hypomorphic mutations in genes encoding transcription factors that regulate B cell differentiation, with PAX5 the most frequent single target (>30% of cases)2 . While this implies a key tumour suppressive function for PAX5, the mechanisms underlying this function are not well understood. We have developed an RNAi-based approach to investigate the phenotypic and transcriptional changes that occur in the context of Pax5 hypomorphic leukemia. Using reversible shRNA that effects significant knockdown of Pax5, we have generated transgenic mice in which Pax5 hypomorphism cooperates with a constitutively active STAT5 transgene to induce B-ALL. The hematopoietic organs of leukemic mice show an accumulation of CD19+IgM–cKit–CD25+ pre-B cells, indicating a specific and complete block of differentiation at this early stage of B cell development. Interestingly, upon restoration of endogenous Pax5 expression, leukemic cells upregulate surface IgM, consistent with re-engagement of B cell maturation. Remarkably, this was accompanied by dramatic tumour clearance in the absence of leukemic cell death. Our results suggest that mutations in the B lineage transcription factors may contribute to leukemogenesis primarily through interruption of normal differentiation. Furthermore, Pax5 hypomorphic B-ALL cells retain the potential to resume B cell differentiation, suggesting a novel therapeutic strategy for this leukemia.