Research over the past decade has suggested important roles for pseudogenes in physiology and disease. In vitro experiments demonstrated that pseudogenes contribute to cell transformation through several mechanisms. However, in vivo evidence for a causal role of pseudogenes in cancer development is lacking. Here, we report that mice engineered to overexpress either the full-length murine B-Raf pseudogene Braf-rs1 or its pseudo "CDS" or "3′ UTR" develop an aggressive malignancy resembling human diffuse large B cell lymphoma. We show that Braf-rs1 and its human ortholog, BRAFP1, elicit their oncogenic activity, at least in part, as competitive endogenous RNAs (ceRNAs) that elevate BRAF expression and MAPK activation in vitro and in vivo. Notably, we find that transcriptional or genomic aberrations of BRAFP1 occur frequently in multiple human cancers, including B cell lymphomas. Our engineered mouse models demonstrate the oncogenic potential of pseudogenes and indicate that ceRNA-mediated microRNA sequestration may contribute to the development of cancer.