TAL1/SCL is a basic helix-loop-helix (bHLH) oncoprotein that is expressed in several cell lines including many hematolymphoid cells, but not in T- and B-lineage cells. The TAL1 gene was originally discovered as being transcriptionally activated by chromosomal rearrangements in T-cell acute lymphoblastic leukemia (T-ALL). Here we have shown that TAL1 and the ubiquitously expressed murine bHLH transcription factor ALF1 formed heterodimers that, compared with ALF1 homodimers, had a more restricted E-box specificity and bound preferentially to the glucocorticoid-responsive E-box (Egre) motif (AACAGATGGT). Overexpression of the dominant inhibitory HLH protein Id1 in NIH3T3 cells reduced the transcriptional activity mediated by ALF1 homodimers, whereas the transcriptional activity mediated by TAL1/ALF1 heterodimers was resistant to Id overexpression. Our results show that ALF1 may serve as a dimerization partner for the bHLH oncoprotein TAL1 and form a complex with a distinctive DNA binding property. These findings support the hypothesis that the leukemic characteristics of the TAL1 oncoprotein could be mediated by activation of a set of target genes as heterodimeric complexes with ubiquitously expressed bHLH transcription factors such as ALF1 and that a principal role of TAL1 might be to neutralize an Id-mediated inactivation.