The AML-1/ETO fusion protein is created by the (8;21) translocation, the second most frequent chromosomal abnormality associated with acute myeloid leukemia. In the fusion protein the AML-1 runt homology domain, which is responsible for DNA binding and CBF beta interaction, is linked to ETO, a gene of unknown function. The primary sequences of the runt homology domain indicates no known DNA binding motifs, but is predicted to contain six beta-strands, two alpha-helices and a nucleotide binding motif. Mutagenesis of AML-1/ETO was performed to delimit the functional domains of the chimeric protein. Most mutations in the runt homology domain that resulted in reduced CBF beta binding also inhibited DNA binding, indicating that the DNA and CBF beta binding sequences are tightly linked. However, these activities were separated by a point mutation of residue 144, within the putative ATP binding motif, which nearly eliminated DNA binding, but did not affect CBF beta binding. Random mutagenesis identified the hydrophobic face of the amphipathic fifth beta-strand, adjacent to the putative ATP binding motif, as critical for both DNA and CBF beta binding. C-terminal deletion mutants of AML-1/ETO indicated that ETO sequences are essential for interference with AML-1B-mediated transcriptional activation, and that residue 540 defines the C-terminal boundary of a potential repression domain. Thus, these mutational analyses define the regions of AML-1/ETO which regulate its function and that may be important in promoting leukemia.