AbstractB lymphoid development is initiated by the differentiation of hematopoietic stem cells into lineage committed progenitors, ultimately generating mature B cells. This highly regulated process generates clonal immunological diversity via recombination of immunoglobulin V, D and J gene segments. While several transcription factors that control B cell development and V(D)J recombination have been defined, how these processes are initiated and coordinated into a precise regulatory network remains poorly understood. Here, we show that the transcription factor ETS Related Gene (Erg) is essential for early B lymphoid differentiation. Erg initiates a transcriptional network involving the B cell lineage defining genes, Ebf1 and Pax5, which directly promotes expression of key genes involved in V(D)J recombination and formation of the B cell receptor. Complementation of Erg deficiency with a productively rearranged immunoglobulin gene rescued B lineage development, demonstrating that Erg is an essential and stage-specific regulator of the gene regulatory network controlling B lymphopoiesis.