Acute promyelocytic leukemia (APL) associated with chromosomal rearrangement t(11;17) is a distinct syndrome which, unlike typical t(15;17) APL, fails to respond to all-trans retinoic acid (ATRA) therapy. In t(11;17) the PLZF gene, encoding a Krüppel-like zinc finger protein, is fused to the retinoic acid receptor-alpha (RAR alpha) gene, yielding two classes of chimeric proteins. PLZF protein was found in the nucleus in a punctate speckled pattern that differed from the nuclear body expression pattern of the PML protein affected in t(15;17) APL. The reciprocal PLZF-RAR alpha and RAR alpha-PLZF fusion proteins were localized to the nucleus both in the presence and absence of ATRA. PLZF-RAR alpha, in combination with the retinoid X receptor (RXR) bound to a retinoic acid-responsive element (RARE) less efficiently than RAR alpha and formed multimeric DNA-protein complexes. PLZF-RAR alpha stimulated ATRA-dependent transcription of RARE-containing reporter genes with diminished activity compared to wild-type RAR alpha. In addition, PLZF-RAR alpha antagonized the function of coexpressed wild-type RAR alpha, an effect relieved by over-expression of RXR. Leukemogenesis in t(11;17) APL may be related to interference with ATRA-mediated differentiation due to sequestration of RXR by the PLZF-RAR alpha chimera. However, disruption of the function of the myeloid-specific PLZF protein may also play an important role.