To bind DNA and to be retained in the nucleus, PBX proteins must form heterodimeric complexes with members of the MEINOX family. Therefore the balance between PBX and MEINOX must be an important regulatory feature. We show that overexpression of PREP-1 influences the level of PBX-2 protein maintaining the PREP-1-PBX balance. This effect has important functional consequences. F9 teratocarcinoma cells stably transfected with PREP-1 had an increased DNA binding activity to a PREP-PBX-responsive element. Because PREP-1 binds DNA efficiently only when dimerized to PBX, the increased DNA binding activity suggests that the level of PBX might also have increased. Indeed PREP-1-overexpressing cells had a higher level of PBX-2 and PBX-1b proteins. PBX-2 increase did not depend on increased mRNA level or a higher rate of translation but rather because of a protein stabilization process. Indeed, PBX-2 level drastically decreased after 3 h of cycloheximide treatment in control but not in PREP-1-overexpressing cells and the proteasome inhibitor MG132 prevented PBX-2 decay in control cells. Hence, dimerization with PREP-1 appears to decrease proteasomal degradation of PBX-2. Retinoic acid induces differentiation of F9 teratocarcinoma cells with a cascade synthesis of HOX proteins. In PREP-1-overexpressing cells, HOXb1 induction was more sustained (3 days versus 1 day) and the induced level of MEIS-1b, another TALE (three amino acid loop extension) protein involved in embryonal development, was higher. Thus an increase in PREP-1 leads to changes in the fate-determining HOXb1 and has therefore important functional consequences.