We use the Drosophila melanogaster larval hematopoietic system as an in vivo model for the genetic and functional genomic analysis of oncogenic cell overproliferation. Ras regulates cell proliferation and differentiation in multicellular eukaryotes. To further elucidate the role of activated Ras in cell overproliferation, we generated a collagen promoter-Gal4 strain to overexpress Ras(V12) in Drosophila hemocytes. Activated Ras causes a dramatic increase in the number of circulating larval hemocytes (blood cells), which is caused by cellular overproliferation. This phenotype is mediated by the Raf/MAPK pathway. The mutant hemocytes retain the ability to phagocytose bacteria as well as to differentiate into lamellocytes. Microarray analysis of hemocytes overexpressing Ras(V12) vs. Ras(+) identified 279 transcripts that are differentially expressed threefold or more in hemocytes expressing activated Ras. This work demonstrates that it will be feasible to combine genetic and functional genomic approaches in the Drosophila hematopoietic system to systematically identify oncogene-specific downstream targets.