AML1-ETO is generated by the t(8;21) translocation found in approximately 12% of acute myelogenous leukemia. Studies to delineate the mechanism by which AML1-ETO induces leukemia have primarily relied on transformed human cell lines or murine model systems. The goal of this study was to determine the effect of AML1-ETO expression on primary human hematopoietic cells in vitro and in a xenograft model. We used a FMEV retroviral vector for the transfer of AML1/ETO into human CD34 + cells. The repopulation, self-renewal, and differentiation potential of infected cells were assessed in serum-free liquid culture, colony assays, and in transplanted NOD-SCID mice. High transcription levels were confirmed by real-time PCR. AML1-ETO expressing cells were expandable for up to 12 weeks and retained an immature morphology. The capacity for prolonged survival, however, did not abrogate maturation, as AML1-ETO cells gave rise to normal colonies in a CFU-assay. AML1/ETO-expressing cells also contributed to myeloid (CD15, CD33), B-lymphoid (CD20), NK-cell (CD56) and erythroid (GPA) lineages in xenografted NOD/SCID mice. Although able to engraft all major lineages, AML1/ETO transplanted cells were primarily found in less differentiated fractions as measured by cell surface markers CD34 and CD38. In spite of a good engraftment and prolonged observation period none of the NOD/SCID-mice developed an acute myelogenous leukemia. Our findings demonstrate that AML1/ETO promotes the maintenance of early human hematopoietic progenitors, but does not abrogate their physiologic differentiation. Furthermore, the leukemogenic potential of AML1/ETO expressed in human progenitors is low, despite transcription levels equivalent to those found in AMLs.