Epigenetic dysregulation and genetic mutations both contribute to cancer development. While genetic mutations such as gain-of-function mutations in oncogenes and loss-of-function mutations in tumor suppressors have been extensively studied, the mechanisms by which epigenetic dysregulation arises and causes cancers remain obscure. This project investigates the molecular mechanisms by which oncoproteins induce heterochromatin destabilization, thereby epigenetically causing tumor formation. We propose to use the epigenetic effects of JAK/STAT activation in Drosophila as a paradigm to study the molecular mechanisms of epigenetic causes of tumorigenesis. Aberrant activation of JAK/STAT signaling is associated with many types of human cancers, and gain-of-function mutations in JAK have been identified that cause human leukemia. The effects of JAK/STAT signaling have been attributed largely to direct transcriptional regulation by STAT of specific target genes that promote tumor cell proliferation and/or survival. We have recently shown in a Drosophila hematopoietic tumor model, however, that JAK overactivation globally disrupts heterochromatin formation, which leads to derepression of genes that are not necessarily direct targets of STAT. We have further shown that heterochromatin levels greatly influence oncogenic JAK-induced tumor formation and cell overproliferation. These results suggest that global epigenetic dysregulation in the form of heterochromatin destabilization may play an essential role in cancer initiation and/or progression. We hypothesize that proper heterochromatin formation constitutes an epigenetic tumor suppression mechanism, and that overactivation of JAK/STAT signaling induces tumor formation in part by globally disrupting heterochromatin. To test this hypothesis, we will take advantage of the Drosophila genetic system to carry out genetic and biochemical experiments to determine the molecular mechanisms by which JAK/STAT activation leads to heterochromatin instability, and the causal role of heterochromatin destabilization in tumor formation. Results from these studies should advance our knowledge of how genetic and epigenetic mechanisms cooperate in cancer development in humans and should also lead to new therapeutic targets for human cancer treatment.