Background: The ETS transcription factor ERG is essential for the maintenance of hematopoietic stem cells. However, it has also been implicated as an oncogene in the development of acute leukemia. Our studies and those of others have demonstrated that ERG directly contributes to the initiation and maintenance of lymphoid and myeloid acute leukemia subtypes. Nevertheless, ERG co-factors critically involved in leukemogenesis remain largely uncharacterized. Aims: Here we report a critical role for the conserved amino-acid proline at position 199, at the 3' end of the PNT domain, for ERG's leukemogenic activity. Design and Results: We specifically demonstrate in functional and gene expression assays that P199 is required for ERG-induced myeloid differentiation restriction and for self-renewal and maintenance of murine hematopoietic stem and progenitor cells (HSPC). To identify key protein interactions associated with leukemia progression induced by ERG, we used proximity ligation-mass spectrometry. The proximity maps of wildtype (WT)-ERG and mutated form of ERG at position 199 (P199L-ERG) were compared in HEK293 cells. Most significantly, the mutation severely impaired ERG's interaction with components of the NCoR-HDAC3 complex, resulting in a 40% reduction in the number of spectral counts in comparison with WT-ERG. ChIP-sequencing for histone markers conducted on ER-Hoxb8 cells (murine GMPs) demonstrated a decrease in H3K27ac signature at over 1500 unique sites in cells transduced with WT-ERG compared to those transduced with the mutant. Interestingly, these sites were predominantly associated with enhancers of genes expressed in mature myeloid cells. Furthermore, in gene expression assays conducted on ER-Hoxb8 cells stably expressing human ERG and treated with an HDAC3 inhibitor, myeloid differentiation genes and pathways associated with acute leukemia were most affected. Finally, we examined the significance of the ERG/NCoR-HDAC3 interaction in human leukemia models. Targeting HDAC3 using pharmacological and genetic tools led to a significant antileukemic effect in NSG mice transplanted with ERG-dependent human leukemia lines. Conclusions: Our findings indicate that the aberrant overexpression of ERG maintains HSPCs in an undifferentiated state and promotes AML development. We suggest that the interaction between ERG and the NCoR-HDAC3 complex has an important role in the leukemogenic process, and that HDAC3 inhibition could be beneficial in AML characterized by high ERG expression.