Children with constitutional trisomy 21 or Down's syndrome (DS) are predisposed to develop myeloid leukemia (ML) at a young age. DS-ML is frequently preceded by transient leukemia (TL), a spontaneously resolving accumulation of blasts during the newborn period. Somatic mutations of GATA1 in the blasts of TL and DS-ML likely function as an initiating event. We hypothesized that the phenotypic difference between TL and DS-ML is due to a divergent functional repertoire of the leukemia-initiating cells. Using an NOD/SCID model, we found that cells initiating DS-ML engrafted, disseminated to distant bone marrow sites, and propagated the leukemic clone in secondary recipients. In contrast, TL cells lacked the ability to expand and to migrate, but were able to persist in the recipient bone marrow. We found some evidence of genomic progression with 1 of 9 DS-ML samples and none of 11 TL samples harboring a mutation of N-RAS. The findings of this pilot study provide evidence for the functional impact of second events underlying the transformation of TL into DS-ML and a needed experimental tool for the functional testing of these promoting events.