Chromosomal translocations generating fusion proteins are frequently found in human leukemias. The fusion proteins play an important role in leukemogenesis by subverting the function of one or both partner proteins. The leukemogenic CALM-AF10 fusion protein is capable of interacting with the histone H3 lysine 79 (H3K79)-specific methyltransferase hDOT1L through the fused AF10 moiety. This interaction leads to local H3K79 hypermethylation on Hoxa5 loci, which up-regulates the expression of Hoxa5 and contributes to leukemogenesis. However, the long latency of leukemogenesis of CALM-AF10 transgenic mice suggests that the direct effects of fusion oncogene are not sufficient for the induction of leukemia. In this study, we show that the CALM-AF10 fusion protein can also greatly reduce global H3K79 methylation in both human and murine leukemic cells by disrupting the AF10-mediated association of hDOT1L with chromatin. Cells with reduced H3K79 methylation are more sensitive to gamma-irradiation and display increased chromosomal instability. Consistently, leukemia patients harboring CALM-AF10 fusion have more secondary chromosomal aberrations. These findings suggest that chromosomal instability associated with global epigenetic alteration contributes to malignant transformation in certain leukemias, and that leukemias with this type of epigenetic alteration might benefit from treatment regimens containing DNA-damaging agents. This study is registered with www.clinicaltrials.gov as NCT00266136.