The t(12;21)(p12;q22) chromosomal aberration, which is frequently observed in pediatric precursor B-cell acute lymphoblastic leukemia (ALL), generates the TEL/AML1 chimeric gene and protein. TEL/AML1-positive ALL has a favorable prognosis, and one possible reason is that this subtype of ALL rarely shows drug resistance. AML1/ETO, another AML1-containing chimeric protein, has been shown to transcriptionally repress the activity of the multidrug resistance-1 (MDR-1) gene promoter; thus, we examined whether TEL/AML1 also represses MDR-1 gene expression, possibly preventing the emergence of multidrug resistance. In this study, we show that the TEL/AML1 protein binds to the consensus AML1 binding site in the MDR-1 promoter and transcriptionally represses its activity. Following transient transfection of TEL/AML1 protein into Adriamycin-resistant K562/Adr cells, we also demonstrate that TEL/AML1 can down-regulate the expression of P-glycoprotein, a product of the MDR-1 gene, and restore the chemosensitivity to the cells. Furthermore, we report that MDR-1 mRNA levels in leukemic cells obtained from TEL/AML1-positive ALL patients are lower than those from TEL/AML1-negative ALL patients. Thus, TEL/AML1 protein acts as a transcriptional repressor of MDR-1 gene expression, and although TEL/AML1 has been implicated in leukemogenesis, its effects on the MDR-1 gene may contribute to the excellent prognosis of TEL/AML1-positive ALL with current therapy.