Although both heterodimeric subunits of core binding factors (AML1/RUNX1 and CBFbeta) essential for normal hematopoiesis are frequently mutated to form different chimeric fusion proteins in acute leukemia, the underlying molecular mechanisms and structural domains required for cellular transformation remain largely unknown. Despite the critical role of CBFbeta for wild-type AML1 function and its direct involvement in chromosomal translocation, we demonstrate that both the expression and interaction with CBFbeta are superfluous for AML1-ETO (AE)-mediated transformation of primary hematopoietic cells. Similarly, the hetero-oligomeric interaction with transcriptional repressor ETO family proteins and the highly conserved NHR1 domain in AE fusion are also dispensable for transforming activity. In contrast, AE-mediated transformation is critically dependent on the DNA binding and homo-oligomeric properties of the fusion. Abolishment of homo-oligomerization by a small-molecule inhibitor could specifically suppress AML1 fusion-mediated transformation of primary hematopoietic cells. Together, these results not only identify the essential molecular components but also potential avenues for therapeutic targeting of AE-mediated leukemogenesis.