The chromosomal translocation t(12;21) (p12;q22) which results in the TEL-AML1 fusion gene is the most frequent genetic rearrangement in childhood B-lineage acute lymphoblastic leukemia (ALL). The rearrangement in this locus, however, is only rarely observed by routine karyotypic analysis. We established a nested-reverse transcriptase-polymerase chain reaction (nested-RT-PCR) technique for the detection of the TEL-AML1 transcript, and used this to investigate the incidence of the rearrangement, and to characterize the disease present in TEL-AML1-positive B-lineage ALL patients. The TEL-AML1 fusion transcript was detected in nine of fourteen patients. These patients were relatively homogeneous in that they were young and had low presenting leukocyte counts, both features of which are associated with a favorable prognosis. Furthermore, we could detect the TEL-AML1 transcript in the peripheral blood of t(12;21)-positive patients and we used this to assess minimal residual disease (MRD) in patients during chemotherapy. The data demonstrate that nested-RT-PCR is a suitable tool for diagnosing t(12;21)-positive ALL, that these patients constitute a clinically distinct subgroup of ALL patients, and that the method could also be used to monitor MRD in these patients.