Abnormalities of the short arm of chromosome 12 including loss of heterozygosity (LOH) and TEL/AML-1 fusion resulting from a t(12;21)(p13;q22) translocation are frequently observed in childhood acute lymphoblastic leukemia (ALL). We investigated 21 DNA samples of childhood ALL which had LOH at 12p13. Rearrangement of TEL was observed in eight cases and another case showed a homozygous deletion of TEL. Two informative samples with TEL rearrangement had a deletion localized to the 5' region of this gene. The deletion in these two cases includes the helix-loop-helix (HLH) domain. This is consistent with the hypothesis that the normal tel can heterodimerize with the TEL/AML-1 gene product and inhibit the transforming capacity of the chimeric protein. Presumably, loss of the HLH of the normal remaining TEL allele abrogates this tumor suppressor-like function. The case with homozygous deletion of TEL is also consistent with this gene having qualities of a tumor suppressor. One unusual case had T-ALL rather than B-lineage ALL and the leukemic cells had rearrangement of TEL, but they did not have an alteration of the remaining TEL allele suggesting that the etiology of this disease may be different. This analysis further emphasizes the importance of loss of the normal TEL allele in childhood precursor B-lineage ALL.