Nuclear receptor-binding SET domain protein 1 (NSD1) prototype is a family of mammalian histone methyltransferases (NSD1, NSD2/MMSET/WHSC1, NSD3/WHSC1L1) that are essential in development and are mutated in human acute myeloid leukemia (AML), overgrowth syndromes, multiple myeloma and lung cancers. In AML, the recurring t(5;11)(q35;p15.5) translocation fuses NSD1 to nucleoporin-98 (NUP98). Here, we present the first characterization of the transforming properties and molecular mechanisms of NUP98-NSD1. We demonstrate that NUP98-NSD1 induces AML in vivo, sustains self-renewal of myeloid stem cells in vitro, and enforces expression of the HoxA7, HoxA9, HoxA10 and Meis1 proto-oncogenes. Mechanistically, NUP98-NSD1 binds genomic elements adjacent to HoxA7 and HoxA9, maintains histone H3 Lys 36 (H3K36) methylation and histone acetylation, and prevents EZH2-mediated transcriptional repression of the Hox-A locus during differentiation. Deletion of the NUP98 FG-repeat domain, or mutations in NSD1 that inactivate the H3K36 methyltransferase activity or that prevent binding of NUP98-NSD1 to the Hox-A locus precluded both Hox-A gene activation and myeloid progenitor immortalization. We propose that NUP98-NSD1 prevents EZH2-mediated repression of Hox-A locus genes by colocalizing H3K36 methylation and histone acetylation at regulatory DNA elements. This report is the first to link deregulated H3K36 methylation to tumorigenesis and to link NSD1 to transcriptional regulation of the Hox-A locus.