The origin and stage of differentiation of the blast-crisis cells in chronic myelogenous leukemia have remained uncertain. Because immunoglobulin heavy-chain and light-chain genes must undergo a DNA rearrangement during B-cell development but rarely do so in human non-B-cell lineages, we examined these genes in 18 episodes of chronic myelogenous leukemia. In eight of nine episodes of lymphoid blast crisis, heavy-chain genes were rearranged, and in three, rearrangements in light-chain genes were also present. In contrast, cells from chronic myeloid, myeloid blast, and erythroid-like phases retained germ-like immunoglobulin genes. The observed phenotypic markers and gene configurations revealed that most lymphoid blast crises represent stages of development of B-cell precursors. In two separate episodes of lymphoid crisis, cells from a single patient possessed identical heavy-chain but different light-chain-gene configurations. Thus, the precursor cells that monoclonally expand to produce a lymphoid crisis are capable of immunoglobulin-gene rearrangements and represent discrete steps in early B-cell maturation.