Twenty-five percent of human pediatric pre-B-cell acute lymphoblastic leukemias (ALLs) are characterized by the t(1;19)(q23;p13.3) chromosomal translocation. This translocation joins the 5' region of the E2A gene to the 3' region of the Pbx1 gene. The protein encoded by this chimeric gene contains the N-terminal transcriptional activation domain of E2A fused to the C-terminal region of Pbx1, which contains a putative homeodomain. Here we show that the Pbx1 homeodomain preferentially binds the sequence ATCAATCAA. We further show that promoters containing Pbx1-binding sites are activated by the chimeric E2A-Pbx1 protein but not by Pbx1. These results indicate that the t(1;19) translocation converts a nonactivating DNA-binding protein into a potent transcriptional activator, suggesting an unusual mechanism for oncogenic transformation.