Children with Down syndrome develop a unique congenital clonal megakaryocytic proliferation disorder (transient myeloproliferative disorder [TMD]). It is caused by an expansion of fetal megakaryocyte-erythroid progenitors (MEPs) triggered by trisomy of chromosome 21 and is further enhanced by the somatic acquisition of a mutation in GATA1. These mutations result in the expression of a short-isoform GATA1s lacking the N-terminal domain. To examine the hypothesis that the Hsa21 ETS transcription factor ERG cooperates with GATA1s in this process, we generated double-transgenic mice expressing hERG and Gata1s. We show that increased expression of ERG by itself is sufficient to induce expansion of MEPs in fetal livers. Gata1s expression synergizes with ERG in enhancing the expansion of fetal MEPs and megakaryocytic precursors, resulting in hepatic fibrosis, transient postnatal thrombocytosis, anemia, a gene expression profile that is similar to that of human TMD and progression to progenitor myeloid leukemia by 3 months of age. This ERG/Gata1s transgenic mouse model also uncovers an essential role for the N terminus of Gata1 in erythropoiesis and the antagonistic role of ERG in fetal erythroid differentiation and survival. The human relevance of this finding is underscored by the recent discovery of similar mutations in GATA1 in patients with Diamond-Blackfan anemia.