PAX5 is a transcription factor essential for B-cell development. Recently, it has been found as a frequent target of aberrancies in childhood acute lymphoblastic leukemia (ALL; 30% of B cell ALL cases), showing monoallelic loss, point mutations, or chromosomal translocations. The role of these aberrancies is still poorly understood. We previously cloned the PAX5/TEL fusion gene in a patient affected by B-cell precursor ALL with a t(9;12) translocation. This is the first report investigating the molecular and functional roles of PAX5/TEL protein in vitro from murine wild-type pre-BI cells. We showed that PAX5/TEL protein acts as an aberrant transcription factor with repressor function, recruiting mSin3A, down-regulating B220, CD19, BLNK, MB-1, FLT3, and mu heavy chain expression, thus suggesting a block on B-cell differentiation. In a PAX5-deficient context, the presence of PAX5/TEL did not replace PAX5 functions. PAX5/TEL protein enhances cell migration towards CXCL12, with the overexpression of CXCR4. Moreover, the presence of the fusion gene overcomes interleukin-7 withdrawal and interferes with transforming growth factor-beta1 pathway, inducing resistance and conferring cells an advantage in proliferation and survival. Thus, in vitro, the PAX5/TEL protein has a dominant effect on wild-type PAX5, interferes with the process of B-cell differentiation and migration, and induces resistance to apoptosis. Taken together, these phenomena likely represent key events in the process of B-cell transformation.