Ewing sarcoma is the second most common malignant pediatric bone tumor. Over 80% of Ewing sarcoma contain the oncogene EWS/FLI-1, which encodes the EWS/FLI-1 oncoprotein, a hybrid transcription factor comprised of NH2-terminal sequences from the RNA-binding protein EWS and the DNA-binding and COOH-terminal regions of the Ets transcription factor FLI-1. Although numerous genes are dysregulated by EWS/FLI-1, advances in Ewing sarcoma cancer biology have been hindered by the lack of an animal model because of EWS/FLI-1-mediated cytotoxicity. In this study, we have developed conditions for the isolation and propagation of murine primary bone-derived cells (mPBDC) that stably express EWS/FLI-1. Early-passage EWS/FLI-1 mPBDCs were immortalized in culture but inefficient at tumor induction, whereas later-passage cells formed sarcomatous tumors in immunocompetent syngeneic mice. Murine EWS/FLI-1 tumors contained morphologically primitive cells that lacked definitive lineage markers. Molecular characterization of murine EWS/FLI-1 tumors revealed that some but not all had acquired a novel, clonal in-frame p53 mutation associated with a constitutive loss of p21 expression. Despite indications that secondary events facilitated EWS/FLI-1 mPBDC tumorigenesis, cells remained highly dependent on EWS/FLI-1 for efficient transformation in clonogenic assays. This Ewing sarcoma animal model will be a useful tool for dissecting the molecular pathogenesis of Ewing sarcoma and provides rationale for the broader use of organ-specific progenitor cell populations for the study of human sarcoma.