Chronic myelogenous leukaemia (CML) can progress from a slow growing chronic phase to an aggressive blast crisis phase, but the molecular basis of this transition remains poorly understood. Here we have used mouse models of CML to show that disease progression is regulated by the Musashi-Numb signalling axis. Specifically, we find that the chronic phase is marked by high levels of Numb expression whereas the blast crisis phase has low levels of Numb expression, and that ectopic expression of Numb promotes differentiation and impairs advanced-phase disease in vivo. As a possible explanation for the decreased levels of Numb in the blast crisis phase, we show that NUP98-HOXA9, an oncogene associated with blast crisis CML, can trigger expression of the RNA-binding protein Musashi2 (Msi2), which in turn represses Numb. Notably, loss of Msi2 restores Numb expression and significantly impairs the development and propagation of blast crisis CML in vitro and in vivo. Finally we show that Msi2 expression is not only highly upregulated during human CML progression but is also an early indicator of poorer prognosis. These data show that the Musashi-Numb pathway can control the differentiation of CML cells, and raise the possibility that targeting this pathway may provide a new strategy for the therapy of aggressive leukaemias.