The LYL1 gene encodes a basic helix-loop-helix transcription factor involved in T-cell acute lymphoblastic leukemia. Using real-time quantitative RT-PCR assay, we found that the expression of LYL1 was at higher levels in the majority cases of acute myeloblastic leukemia (AML) or myelodysplastic syndrome when compared to normal bone marrow. Our study also showed that LYL1 was highly expressed in most AML cell lines and in CD34+ AML cells. To determine whether LYL1 had an affect on the phenotype and behavior of myeloid cells, we introduced full-length LYL1 cDNA into K562 cells using electroporation and U937 cells with retroviral infection. Both of the derivative cell lines with overexpression of LYL1 had an increased growth rate and clonogenecity. Forced expression of LYL1 in K562 cells enhanced spontaneous and hemin-induced erythroid differentiation but blocked spontaneous as well as PMA-induced megakaryocytic differentiation. Overexpression of LYL1 in U937 cells blocked all-trans retinoic acid-induced monocytic differentiation. The LYL1-transfected U937 cells were also more resistant to the cytotoxic drug cytarabine. These results demonstrate that LYL1 may play a role in early hematopoiesis and may be a potential oncogenic factor in AML.