The AML1-ETO fusion transcription factor generated by the t(8;21) translocation is considered to deregulate the expression of genes that are crucial for normal differentiation and proliferation of hematopoietic progenitors, resulting in acute myelogenous leukemia by recruiting co-repressor complexes to DNA. To investigate the role of AML1-ETO in leukemogenesis, we transfected the cloned AML1-ETO cDNA and expressed the AML1-ETO protein in U937 myelomonocytic leukemia cells. By focusing on the anti-apoptotic gene Bcl-2, the key regulator gene of granulocytic differentiation CCAAT/enhancer-binding protein α (CEBPA) and the tumor suppressor gene p14(ARF), we found that both AML1-ETO-expressing cell lines and t(8;21) leukemia samples displayed low levels of these three genes. Chromatin immunoprecipitation assays demonstrated that Bcl-2, CEBPA and p14(ARF) were direct transcriptional targets of AML1-ETO. The universal binding of AML1-ETO to genomic DNA resulted in recruitment of methyl-CpG binding protein 2 (MeCP2), reduction of histone H3 or H4 acetylation and increased trimethylation of histone H3 lysine 9 as well as lysine 27 indicating that AML1-ETO induced heterochromatic silencing of Bcl-2, CEBPA and p14(ARF). These results suggested that the aberrant transcription factor AML1-ETO epigenetically silenced the function of the Bcl-2, CEBPA and p14(ARF) genes by inducing repressed chromatin configurations at their promoters through histone modifications.