Abnormal activation of SETBP1 through overexpression or missense mutations is highly recurrent in various myeloid malignancies; however, it is unclear whether such activation alone is able to induce leukemia development. Here we show that Setbp1 overexpression in mouse bone marrow progenitors through retroviral transduction is capable of initiating leukemia development in irradiated recipient mice. Before leukemic transformation, Setbp1 overexpression significantly enhances the self-renewal of hematopoietic stem cells (HSCs) and expands granulocyte macrophage progenitors (GMPs). Interestingly, Setbp1 overexpression also causes transcriptional repression of critical hematopoiesis regulator gene Runx1 and this effect is crucial for Setbp1-induced transformation. Runx1 repression is induced by Setbp1-mediated recruitment of a nucleosome remodeling deacetylase (NuRD) complex to Runx1 promoters and can be reversed by treatment with histone deacetylase (HDAC) inhibitors Entinostat and Vorinostat. Moreover, treatment with these inhibitors caused efficient differentiation of Setbp1 activation-induced leukemia cells in vitro, and significantly extended the survival of mice transplanted with such leukemias, suggesting that HDAC inhibition could be an effective strategy for treating myeloid malignancies with SETBP1 activation.