The expression of Pax5 commits common lymphoid progenitor cells to B-lymphoid lineage differentiation. Little is known of possible variations in the levels of Pax5 expression and their influences on hematopoietic development. We have developed a retroviral transduction system that allows for the study of possible intermediate stages of this commitment by controlling the levels of Pax5 expressed in Pax5-deficient progenitors in vitro and in vivo. Retroviral transduction of Pax5-deficient pro-/pre-B cell lines with a doxycycline-inducible (TetON) form of the human Pax5 (huPax5) gene yielded cell clones that could be induced to different levels of huPax5 expression. Clones inducible to high levels developed B220(+)/CD19(+)/IgM(+) B cells, while clones with low levels differentiated to B220(+)/CD19(-)/CD11b(+)/Gr-1(-) B-lymphoid/myeloid biphenotypic cells in vitro and in vivo. Microarray analyses of genes expressed at these lower levels of huPax5 identified C/ebpα, C/ebpδ, Pu.1, Csf1r, Csf2r, and Gata-3 as myeloid-related genes selectively expressed in the pro-/pre-B cells that can develop under myeloid/lymphoid conditions to biphenotypic cells. Therefore, reduced expression of huPax5 during the induction of early lymphoid progenitors to B-lineage-committed cells can fix this cellular development at a stage that has previously been seen during embryonic development and in acute lymphoblastic lymphoma-like biphenotypic acute leukemias.