The leukemic fusion protein AML1-ETO occurs frequently in human acute myeloid leukemia (AML) and has received much attention over the past decade. An initial model for its pathogenetic effects emphasized the conversion of a hematopoietic transcriptional activator, RUNX1 (or AML1), into a leukemogenic repressor which blocked myeloid differentiation at the level of target gene regulation. This view has been absorbed into a larger picture of AML1-ETO pathogenesis, encompassing dysregulation of hematopoietic stem cell homeostasis at several mechanistic levels. Recent reports have highlighted a multifaceted capacity of AML1-ETO directly to inhibit key hematopoietic transcription factors that function as tumor suppressors at several nodal points during hematopoietic differentiation. A new model is presented in which AML1-ETO coordinates expansion of the stem cell compartment with diminished lineage commitment and with genome instability.