Ikaros is a unique regulator of lymphopoiesis that associates with pericentromeric heterochromatin and has been implicated in heritable gene inactivation. Binding and competition experiments demonstrate that Ikaros dimers compete with an Ets activator for occupancy of the lymphocyte-specific TdT promoter. Mutations that selectively disrupt Ikaros binding to an integrated TdT promoter had no effect on promoter function in a CD4+CD8+ thymocyte line. However, these mutations abolished down-regulation on differentiation, providing evidence that Ikaros plays a direct role in repression. Reduced access to restriction enzyme cleavage suggested that chromatin alterations accompany down-regulation. The Ikaros-dependent down-regulation event and the observed chromatin alterations appear to precede pericentromeric repositioning. Current models propose that the functions of Ikaros should be disrupted by a small isoform that retains the dimerization domain and lacks the DNA-binding domain. Surprisingly, in the CD4+CD8+ thymocyte line, overexpression of a small Ikaros isoform had no effect on differentiation or on the pericentromeric targeting and DNA-binding properties of Ikaros. Rather, the small isoform assembled into multimeric complexes with DNA-bound Ikaros at the pericentromeric foci. The capacity for in vivo multimer formation suggests that interactions between Ikaros dimers bound to the TdT promoter and those bound to pericentromeric repeat sequences may contribute to the pericentromeric repositioning of the inactive gene.