Mutations in the multi sex combs (mxc) gene in Drosophila results in malignant hyperplasia in larval hematopoietic tissues, called lymph glands (LG). mxc encodes a component of the histone locus body (HLB) that is essential for cell cycle-dependent transcription and processing of histone mRNAs. The mammalian nuclear protein ataxia-telangiectasia (NPAT) gene, encoded by the responsible gene for ataxia telangiectasia, is a functional Mxc orthologue. However, their roles in tumorigenesis are unclear. Genetic analyses of the mxc mutants and larvae having LG-specific depletion revealed that a reduced activity of the gene resulted in the hyperplasia, which is caused by hyper-proliferation of immature LG cells. The depletion of mxc in mature hemocytes of the LG resulted in the hyperplasia. Furthermore, the inhibition of HLB formation was required for LG hyperplasia. In the mutant larvae, the total mRNA levels of the five canonical histones decreased, and abnormal forms of polyadenylated histone mRNAs, detected rarely in normal larvae, were generated. The ectopic expression of the polyadenylated mRNAs was sufficient for the reproduction of the hyperplasia. The loss of HLB function, especially 3′-end processing of histone mRNAs, is critical for malignant LG hyperplasia in this leukemia model in Drosophila. We propose that mxc is involved in the activation to induce adenosine deaminase-related growth factor A (Adgf-A), which suppresses immature cell proliferation in LG.