t(8;21)(q22;q22) results in the AML1-ETO (A1E) fusion gene and is a common cytogenetic abnormality in acute myeloid leukemia (AML). Although insertions at the breakpoint region of the A1E fusion transcripts have been reported, additional structural alterations are largely uncharacterized. By RT-PCR amplifications and DNA sequencing, numerous in-frame and out-of-frame AML1b-ETO and AML1c-ETO transcripts were identified in 13 pediatric t(8;21) AMLs, likely resulting from alternate splicing, internal deletions and/or breakpoint region insertions involving both the AML1 (RUNX1) and ETO regions. The in-frame A1E fusion transcript forms represented minor forms. These structure alterations were found in AML1c-ETO but not AML1b-ETO transcripts in two adult t(8;21) AMLs. Although no analogous alterations were detected in native AML1b transcripts, identical alterations in native ETO transcripts were identified. When transfected into HeLa cells, only AML1b, and not the in-frame A1E forms, transactivated the GM-CSF promoter. In co-transfection experiments, the effects of A1E proteins on GM-CSF transactivation by AML1b ranged from repressive to activating. Our results demonstrate a remarkable and unprecedented heterogeneity in A1E fusion transcripts in t(8;21) myeloblasts and suggest that synthesis of alternate A1E transcript and protein forms can significantly impact the regulation of AML1 responsive genes.