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An increasing number of studies indicate that during development, endothelial and hematopoietic cells derive from common progenitors named hemangioblasts that have important roles in the pathogenesis. This is particularly true in chronic myeloid leukemia (CML). Here, we isolated fetal liver kinase-1-positive (Flk1(+)) cells from CML patients and found they expressed BCR/ABL-specific CML oncogene. We examined their biological characteristics as well as immunological functions and further detected the possible molecular mechanism involved in the leukemia genesis. We showed that CML patient-derived Flk1(+)CD31(-)CD34(-) mesenchymal stem cells (MSCs) had normal morphology, phenotype and karyotype but appeared impaired immuno-modulatory function. The capacity of Flk1(+)CD31(-)CD34(-) MSCs from CML patients to inhibit T lymphocyte activation and proliferation was impaired in vitro. CML patient-derived MSCs have dampening immuno-modulatory functions, suggesting that the dysregulation of hematopoiesis and immune response might originate from MSCs rather than hematopoietic stem cells (HSCs). These Ph(+) putative CML hemangioblast upregulated TGF-β1 and resultantly activated matrix metalloproteinase-9 (MMP-9) to enhance s-KitL and s-ICAM-1 secretion, which activated c-kit(+) HSCs from the quiescent state to the proliferative state. Further studies showed that phosphatidylinositol-3 kinase (PI3K)/Akt/nuclear factor (NF)-κB signaling pathway was involved in CML pathogenesis. Flk1(+)CD31(-)CD34(-) MSCs that express BCR/ABL leukemia oncogene are hemangioblasts and they have a critical role in the progression of CML through PI3K/Akt/NF-κB signaling pathway.