The interferon consensus sequence binding protein (ICSBP) is an interferon regulatory transcription factor, also referred to as IRF8. ICSBP acts as a suppressor of myeloid leukemia, although few target genes explaining this effect have been identified. In the current studies, we identified the gene encoding growth arrest specific 2 (GAS2) as an ICSBP target gene relevant to leukemia suppression. We find that ICSBP, Tel, and histone deacetylase 3 (HDAC3) bind to a cis element in the GAS2 promoter and repress transcription in myeloid progenitor cells. Gas2 inhibits calpain protease activity, and beta-catenin is a calpain substrate in these cells. Consistent with this, ICSBP decreases beta-catenin protein and activity in a Gas2- and calpain-dependent manner. Conversely, decreased ICSBP expression increases beta-catenin protein and activity by the same mechanism. This is of interest, because decreased ICSBP expression and increased beta-catenin activity are associated with poor prognosis and blast crisis in chronic myeloid leukemia (CML). We find that the expression of Bcr/abl (the CML oncoprotein) increases Gas2 expression in an ICSBP-dependent manner. This results in decreased calpain activity and a consequent increase in beta-catenin activity in Bcr/abl-positive (Bcr/abl(+)) cells. Therefore, these studies have identified a Gas2/calpain-dependent mechanism by which ICSBP influences beta-catenin activity in myeloid leukemia.