Chromosome 16 inversion is one of the most common chromosome abnormalities in human acute myeloid leukemia. A fusion gene between the core binding factor B (CBFB) gene and the myosin heavy chain 11 (MYH11) gene is generated by this inversion. Using transgenic mouse models we demonstrated previously that CBFB-MYH11 is necessary but not sufficient for leukemogenesis, and that additional genetic changes are needed for full leukemic transformation. We have since been able to identify such cooperating genetic changes in mice with a retroviral insertional mutagenesis approach. Knowledge of normal hematopoiesis will enhance our understanding of leukemogenic process. To understand the role of Cbfb in hematopoiesis and other developmental processes, mice with a Cbfb-GFP knock-in fusion have been generated. Using these mice we showed that Cbfb is expressed in the hematopoietic stem cells and is required for the function of such cells. These hematopoietic stem cells disappear in mice expressing CBFB-MYH11, indicating that the leukemic fusion gene blocks hematopoiesis at an early stage. Using the Cbfb-GFP mice we have also demonstrated that Cbfb plays an important role in bone development. There was a delayed bone formation in the Cbfb-GFP mice, similar to mice with impaired function of Runx2, a protein that interacts with Cbfb. Interestingly, mutations in the RUNX2 gene are responsible for a human genetic disease, cleiodo-cranial dysplasia (CCD), which is characterized by delayed bone formation. However, 20-35% of CCD patients do not have detectable mutations in their RUNX2 gene, raising the possibility that mutations in the CBFB gene might be responsible for some of those cases.