The multifunctional C terminus of the hematopoietic AML1 transcription factor interacts with coregulatory proteins, supports the convergence and integration of physiological signals, and contains the nuclear matrix targeting signal, the protein motif that is necessary and sufficient to target AML1 to subnuclear sites. The (8;21) chromosomal translocation, which replaces the C terminus of AML1 with the ETO protein, modifies subnuclear targeting of AML1 in acute myeloid leukemia (AML) and results in defective myelopoiesis. We therefore addressed the relevance of AML1 subnuclear targeting and associated functions that reside in the C terminus to myeloid differentiation. A single amino acid substitution that abrogates intranuclear localization was introduced in the AML1 subnuclear targeting signal. Expression of the mutant AML1 protein blocks differentiation of myeloid progenitors to granulocytes in the presence of endogenous AML1 protein, as also occurs in the (8;21) chromosomal translocation, where only one allele of the AML1 gene is affected. The cells expressing the mutant AML1 protein continue to proliferate, maintain an immature blast-like morphology, and exhibit transformed properties that are hallmarks of leukemogenesis. These findings functionally link AML1 subnuclear targeting with competency for myeloid differentiation and expression of the transformed͞leukemia phenotype.acute myeloid leukemia ͉ AML1-ETO fusion protein ͉ nuclear matrix ͉ subnuclear organization C hanges in nuclear morphology are diagnostic hallmarks of leukemic cells and have been traditionally linked to structural and biochemical properties of hematopoietic lineage cells (1-3). In addition, the mammalian nucleus is functionally organized into subnuclear domains that contain regulatory machinery for transcription, replication, and repair (4-6). Alterations in the composition and distribution of these regulatory domains are observed in leukemic phenotypes (5, 7-9). Thus, modifications in nuclear structure and subnuclear organization are associated with normal myeloid cell growth͞differentiation and leukemic transformation.Acute myeloid leukemia (AML) is a prevalent hematopoietic malignancy characterized by abnormal proliferation and abrogated differentiation of myeloid progenitor cells (10, 11). Numerous cytogenetic abnormalities associated with AML involve the gene encoding acute myelogenous leukemia transcription factor 1 (AML1; also designated as Runt-related transcription factor 1, Runx1) (12, 13). AML1 is a nuclear matrix-associated transcription factor essential for hematopoiesis, thereby providing means to investigate nuclear structure-function interrelationships that are linked to biological control and are altered during disease (5, 14). For example, the (8;21) translocation, a predominant mutation identified in Ϸ15% of adult AML patients, produces a chimeric protein (AML1-ETO) in which the C terminus of AML1 is replaced by the ETO protein (13). The AML1-ETO translocation-fusion protein is a dominantnegative inhibitor of the endog...