B-cell receptor (BCR) signaling is a critical pathway in the pathogenesis of several B-cell malignancies, including chronic lymphocytic leukemia (CLL), and can be targeted by inhibitors of BCR-associated kinases, such as Bruton tyrosine kinase (Btk). PCI-32765, a selective, irreversible Btk inhibitor, is a novel, molecularly targeted agent for patients with B-cell malignancies, and is particularly active in patients with CLL. In this study, we analyzed the mechanism of action of PCI-32765 in CLL, using in vitro and in vivo models, and performed correlative studies on specimens from patients receiving therapy with PCI-32765. PCI-32765 significantly inhibited CLL cell survival, DNA synthesis, and migration in response to tissue homing chemokines (CXCL12, CXCL13). PCI-32765 also down-regulated secretion of BCR-dependent chemokines (CCL3, CCL4) by the CLL cells, both in vitro and in vivo. In an adoptive transfer TCL1 mouse model of CLL, PCI-32765 affected disease progression. In this model, PCI-32765 caused a transient early lymphocytosis, and profoundly inhibited CLL progression, as assessed by weight, development, and extent of hepatospenomegaly, and survival. Our data demonstrate that PCI-32765 effectively inhibits CLL cell migration and survival, possibly explaining some of the characteristic clinical activity of this new targeted agent.