The rae28 gene (rae28) is a murine homologue of the Drosophila polyhomeotic gene, which is a member of the Polycomb-group genes. In this study, we examined the role of rae28 in lymphocyte development. Because homozygous rae28-deficient (rae28-/-) mice died in the perinatal period, we examined lymphocyte development by generating chimeric mice reconstituted with green fluorescence protein-labeled mutant fetal liver cells as well as in in vitro culture systems. We further examined RAE28 expression by reverse transcriptase polymerase chain reaction assay in human leukemic cells with B-lineage acute lymphoblastic leukemia (ALL). Severe B-cell maturation arrest was observed in rae28-/- between pro- and pre-B lymphocyte stages. B-cell development was also delayed in heterozygous neonates. Furthermore, interleukin-7-dependent colony-forming ability was impaired not only in homozygous lymphocytes but also in heterozygotes. Its human homologue, RAE28, is located on chromosome 12p13, which frequently is associated with chromosomal abnormalities and loss of heterozygosity in patients with hematologic malignancies. To determine whether a link exists between RAE28 and leukemia, we examined RAE28 expression in leukemic cells from pediatric patients with B-lineage ALL. RAE28 expression was not detected in four B-cell precursor ALL cases of a total of 43 examined, although RAE28 is normally expressed constitutively during the process of B-cell maturation as assessed in isolated cell populations. rae28 plays an important role in the early B-cell developmental stage in a gene dosage-dependent manner. Furthermore, the human RAE28 locus may provide a candidate gene causing the molecular pathogenesis of childhood B-cell precursor ALL.