In previous studies, we identified a common site of retroviral integration designated Fli-2 in Friend murine leukemia virus (F-MuLV)-induced erythroleukemia cell lines. Insertion of F-MuLV at the Fli-2 locus, which was associated with the loss of the second allele, resulted in the inactivation of the erythroid cell- and megakaryocyte-specific gene p45^NFE2. Frequent disruption of p45^NFE2 due to proviral insertion suggests a role for this transcription factor in the progression of Friend virus-induced erythroleukemias. To assess this possibility, erythroleukemia was induced by F-MuLV in p45^NFE2 mutant mice. Since p45^NFE2 homozygous mice mostly die at birth, erythroleukemia was induced in +/ and +/+ mice. We demonstrate that +/ mice succumb to the disease moderately but significantly faster than +/+ mice. In addition, the spleens of +/ mice were significantly larger than those of +/+ mice. Of the 37 tumors generated from the +/ and +/+ mice, 10 gave rise to cell lines, all of which were derived from +/ mice. Establishment in culture was associated with the loss of the remaining wild-type p45^NFE2 allele in 9 of 10 of these cell lines. The loss of a functional p45^NFE2 in these cell lines was associated with a marked reduction in globin gene expression. Expression of wild-type p45^NFE2 in the nonproducer erythroleukemic cells resulted in reduced cell growth and restored the expression of globin genes. Similarly, the expression of p45^NFE2 in these cells also slows tumor growth in vivo. These results indicate that p45^NFE2 functions as an inhibitor of erythroid cell growth and that perturbation of its expression contributes to the progression of Friend erythroleukemia.