The TEL/AML1 chimeric gene is generated by the t(12;21) translocation in pre-B cell acute lymphoblastic leukemia. TEL/AML1 consists of the helix-loop-helix (HLH) dimerization domain from TEL and almost the entire of AML1, but loses the ETS DNA-binding domain from TEL. Dominant-negative effects of TEL/AML1 over wild-type-AML1 are believed to trigger the development of this type of leukemia. However, it could also be possible that TEL/AML1 affects wild-type-TEL's molecular and tumor suppressive functions through the HLH domain. To test this possibility, we first confirmed that TEL/AML1 associates with wild-type-TEL. TEL/AML1 neither bound to the ETS-binding consensus site nor repressed transcription through it. Regardless, this prevented wild-type-TEL-induced transcriptional repression. Moreover, TEL/AML1 concomitantly inhibited wild-type-TEL-induced growth suppression and wild-type-AML1-mediated transforming activity in NIH3T3 cells. All these data indicate that TEL/AML1 exerts dominant-interfering effects on both AML1 and TEL, and that expression of TEL/AML1 could result in inactivation of TEL's tumor suppressive functions in t(12;21)-carrying leukemia.