TEL-TRKC is a fusion gene generated by chromosomal translocation and encodes an activated tyrosine kinase. Uniquely, it is found in both solid tumors and leukemia. However, a single exon difference (in TEL) in TEL-TRKC fusions is associated with the two sets of cancer phenotypes. We expressed the two TEL-TRKC variants in vivo by using the 3 regulatory element of SCL that is selectively active in a subset of mesodermal cell lineages, including endothelial and hematopoietic stem cells and progenitors. The leukemia form of TEL-TRKC (؊ exon 5 of TEL) enhanced hematopoietic stem cell renewal and initiated leukemia. In contrast, the TEL-TRKC solid tumor variant (؉ TEL exon 5) elicited an embryonic lethal phenotype with impairment of both angiogenesis and hematopoiesis indicative of an effect at the level of the hemangioblasts. The ability of TEL-TRKC to repress expression of Flk1, a critical regulator of early endothelial and hematopoietic cells, depended on TEL exon 5. These data indicate that related oncogenic fusion proteins similarly expressed in a hierarchy of early stem cells can have selective, cell type-specific developmental impacts.