The nuclear proto-oncogene c-myb plays crucial roles in the growth, survival, and differentiation of hematopoietic cells. We established three lines of erythropoietin receptor-transgenic mice and found that one of them exhibited anemia, thrombocythemia, and splenomegaly. These abnormalities were independent of the function of the transgenic erythropoietin receptor and were observed exclusively in mice harboring the transgene homozygously, suggesting transgenic disruption of a certain gene. The transgene was inserted 77 kb upstream of the c-myb gene, and c-Myb expression was markedly decreased in megakaryocyte/erythrocyte lineage-restricted progenitors (MEPs) of the homozygous mutant mice. In the bone marrows and spleens of the mutant mice, numbers of megakaryocytes were increased and numbers of erythroid progenitors were decreased. These abnormalities were reproducible in vitro in a coculture assay of MEPs with OP9 cells but eliminated by the retroviral expression of c-Myb in MEPs. The erythroid/megakaryocytic abnormalities were reconstituted in mice in vivo by transplantation of mutant mouse bone marrow cells. These results demonstrate that the transgene insertion into the c-myb gene far upstream regulatory region affects the gene expression at the stage of MEPs, leading to an imbalance between erythroid and megakaryocytic cells, and suggest that c-Myb is an essential regulator of the erythroid-megakaryocytic lineage bifurcation.