The ETS transcription factor ERG has been implicated as a major regulator of both normal and aberrant hematopoiesis. In acute myeloid leukemias harboring t(16;21), ERG function is deregulated due to a fusion with FUS/TLS resulting in the expression of a FUS–ERG oncofusion protein. How this oncofusion protein deregulates the normal ERG transcription program is unclear. Here, we show that FUS–ERG acts in the context of a heptad of proteins (ERG, FLI1, GATA2, LYL1, LMO2, RUNX1 and TAL1) central to proper expression of genes involved in maintaining a stem cell hematopoietic phenotype. Moreover, in t(16;21) FUS–ERG co-occupies genomic regions bound by the nuclear receptor heterodimer RXR:RARA inhibiting target gene expression and interfering with hematopoietic differentiation. All-trans retinoic acid treatment of t(16;21) cells as well as FUS–ERG knockdown alleviate the myeloid-differentiation block. Together, the results suggest that FUS–ERG acts as a transcriptional repressor of the retinoic acid signaling pathway.