The nuclear proteins TAL1 (T-cell acute leukaemia protein 1) and LMO2 (LIM-only protein 2) have critical roles in haematopoietic development, but are also often aberrantly activated in T-cell acute lymphoblastic leukaemia. TAL1 and LMO2 operate within multifactorial protein-DNA complexes that regulate gene expression in the developing blood cell. TAL1 is a tissue-specific basic helix-loop-helix (bHLH) protein that binds bHLH domains of ubiquitous E-proteins, (E12 and E47), to bind E-box (CANNTG) DNA motifs. TAL1(bHLH) also interacts specifically with the LIM domains of LMO2, which in turn bind Ldb1 (LIM-domain binding protein 1). Here we used biophysical methods to characterize the assembly of a five-component complex containing TAL1, LMO2, Ldb1, E12, and DNA. The bHLH domains of TAL1 and E12 alone primarily formed helical homodimers, but together preferentially formed heterodimers, to which LMO2 bound with high affinity (K(A) approximately 10(8) M(-1)). The resulting TAL1/E12/LMO2 complex formed in the presence or absence of DNA, but the different complexes preferentially bound different Ebox-sequences. Our data provide biophysical evidence for a mechanism, by which LMO2 and TAL1 both regulate transcription in normal blood cell development, and synergistically disrupt E2A function in T-cells to promote the onset of leukaemia.