Acute leukemia can show evidence of mixed lineage differentiation, with both myeloid and lymphoid features. To correlate phenotypic lymphoid differentiation with gene rearrangement and transcription of these loci, we examined 50 acute leukemias (including those with both myeloid and/or lymphoid phenotypes) and four non-hematologic controls. We analyzed rearrangement at the immunoglobulin (Ig) and T-cell receptor (TCR) loci, gene expression at these same loci (T beta, C mu, JH), as well as expression of components known to be involved in the process of rearrangement (RAG-1 and terminal deoxynucleotidyl transferase, TdT). In the majority of acute leukemias, including those with myeloid phenotypes, we demonstrated events characteristic of early lymphoid differentiation. We observed that expression of TdT mRNA and sterile transcription at both the Ig and TCR loci (transcription without gene rearrangement) was unexpectedly common in both acute biphenotypic leukemia and acute myelogenous leukemia (AML), and occurred in the absence of phenotypic lymphoid differentiation. Furthermore, coordinated transcription of JH and T beta was frequently noted in the presence of C mu. RAG-1 was detected in approximately 50% of leukemias studied, but expression correlated inversely with TdT and did not correlate with sterile transcription or gene rearrangement. The pattern of sterile transcripts in lymphoid and neoplastic primitive myeloid cells supports the concept of a common early gene program.