RAS mutations arise at high frequency (20–40%) in both acute myeloid leukemia and myelodysplastic syndrome (which is considered to be a manifestation of preleukemic disease). In each case, mutations arise predominantly at the N-RAS locus. These observations suggest a fundamental role for this oncogene in leukemogenesis. However, despite its obvious significance, little is known of how this key oncogene may subvert the process of hematopoiesis in human cells. Using CD34⁺ progenitor cells, we have modeled the preleukemic state by infecting these cells with amphotropic retrovirus expressing mutant N-RAS together with the selectable marker gene lacZ. Expression of the lacZ gene product, β-galactosidase, allows direct identification and study of N-RAS–expressing cells by incubating infected cultures with a fluorogenic substrate for β-galactosidase, which gives rise to a fluorescent signal within the infected cells. By using multiparameter flow cytometry, we have studied the ability of CD34⁺ cells expressing mutant N-RAS to undergo erythroid differentiation induced by erythropoietin. By this means, we have found that erythroid progenitor cells expressing mutant N-RAS exhibit a proliferative defect resulting in an increased cell doubling time and a decrease in the proportion of cells in S + G2M phase of the cell cycle. This is linked to a slowing in the rate of differentiation as determined by comparative cell-surface marker analysis and ultimate failure of the differentiation program at the late-erythroblast stage of development. The dyserythropoiesis was also linked to an increased tendency of the RAS-expressing cells to undergo programmed cell death during their differentiation program. This erythroid lineage dysplasia recapitulates one of the most common features of myelodysplastic syndrome, and for the first time provides a causative link between mutational activation of N-RAS and the pathogenesis of preleukemia.