The AML1-ETO fusion protein is generated from the 8;21 chromosome translocation that is commonly identified in acute myeloid leukemia. AML1-ETO is a DNA binding transcription factor and has been demonstrated to play a critical role in promoting leukemogenesis. Therefore, it is important to define the molecular mechanism of AML1-ETO in the regulation of gene expression. Here, we report that the effect of AML1-ETO on the promoter of multidrug resistance-1 (MDR1) gene, a known AML1-ETO target, is highly cell type specific. Besides observing repression of the MDR1 promoter in C33A and CV-1 cells as reported previously, AML1-ETO strongly activated the promoter in K562 and B210 cells. More importantly, this activation required both the AML1 and ETO portions of the fusion protein, but did not depend on the AML1 binding site in MDR1 promoter. Furthermore, results from promoter deletion analysis and chromatin immunoprecipitation assays suggested that this activation effect was likely through the influence of the general transcription machinery rather than promoter-specific factors. Based on these data, we propose that AML1-ETO may have opposing effects on gene expression depending on the various conditions of the cellular environment.