As STAT5 is critical for the differentiation, proliferation, and survival of progenitor B cells, this transcription factor may play a role in acute lymphoblastic leukemia (ALL). Here, we show increased expression of activated signal transducer and activator of transcription 5 (STAT5), which is correlated with poor prognosis, in ALL patient cells. Mutations in EBF1 and PAX5, genes critical for B cell development have also been identified in human ALL. To determine whether mutations in Ebf1 or Pax5 synergize with STAT5 activation to induce ALL, we crossed mice expressing a constitutively active form of STAT5 (Stat5b-CA) with mice heterozygous for Ebf1 or Pax5. Haploinsufficiency of either Pax5 or Ebf1 synergized with Stat5b-CA to rapidly induce ALL in 100% of the mice. The leukemic cells displayed reduced expression of both Pax5 and Ebf1, but this had little effect on most EBF1 or PAX5 target genes. Only a subset of target genes was deregulated; this subset included a large percentage of potential tumor suppressor genes and oncogenes. Further, most of these genes appear to be jointly regulated by both EBF1 and PAX5. Our findings suggest a model whereby small perturbations in a self-reinforcing network of transcription factors critical for B cell development, specifically PAX5 and EBF1, cooperate with STAT5 activation to initiate ALL.