The AML1 transcription factor, identified by the cloning of the translocation t(8;21) breakpoint, is one of the most frequent targets for chromosomal translocations in leukemia. Furthermore, polysomies and point mutations can also alter AML1 function. AML1, also called CBF alpha 2, PEBP alpha 2 or RUNX1, is thus implicated in a great number of acute leukemias via a variety of pathogenic mechanisms and seems to act either as an oncogene or a tumor suppressor gene. Characterization of AML1 knockout mice has shown that AML1 is necessary for normal development of all hematopoietic lineages and alterations in the overal functional level of AML1 can have a profound effect on hematopoiesis. Numerous studies have shown that AML1 plays a vital role in the regulation of expression of many genes involved in hematopoietic cell development, and the impairment of AML1 function disregulates the pathways leading to cellular proliferation and differentiation. However, heterozygous AML1 mutations alone may not be sufficient for the development of leukemia. A cumulative process of mutagenesis involving additional genetic events in functionally related molecules, may be necessary for the development of leukemia and may determine the leukemic phenotype. We review the known AML1 target genes, AML1 interacting proteins, AML1 gene alterations and their effects on AML1 function, and mutations in AML1-related genes associated with leukemia. We discuss the interconnections between all these genes in cell signaling pathways and their importance for future therapeutic developments.