In a previously developed inducible transgenic mouse model of chronic myeloid leukemia, we now demonstrate that the disease is transplantable using BCR-ABL(+) Lin(-)Sca-1(+)c-kit(+) (LSK) cells. Interestingly, the phenotype is more severe when unfractionated bone marrow cells are transplanted, yet neither progenitor cells (Lin(-)Sca-1(-)c-kit(+)), nor mature granulocytes (CD11b(+)Gr-1(+)), nor potential stem cell niche cells (CD45(-)Ter119(-)) are able to transmit the disease or alter the phenotype. The phenotype is largely independent of BCR-ABL priming before transplantation. However, prolonged BCR-ABL expression abrogates the potential of LSK cells to induce full-blown disease in secondary recipients and increases the fraction of multipotent progenitor cells at the expense of long-term hematopoietic stem cells (LT-HSCs) in the bone marrow. BCR-ABL alters the expression of genes involved in proliferation, survival, and hematopoietic development, probably contributing to the reduced LT-HSC frequency within BCR-ABL(+) LSK cells. Reversion of BCR-ABL, or treatment with imatinib, eradicates mature cells, whereas leukemic stem cells persist, giving rise to relapsed chronic myeloid leukemia on reinduction of BCR-ABL, or imatinib withdrawal. Our results suggest that BCR-ABL induces differentiation of LT-HSCs and decreases their self-renewal capacity.