The leukemia-associated fusion gene AML1/MDS1/EVI1 (AME) encodes a chimeric transcription factor that results from the (3;21)(q26;q22) translocation. This translocation is observed in patients with therapy-related myelodysplastic syndrome (MDS), with chronic myelogenous leukemia during the blast crisis (CML-BC), and with de novo or therapy-related acute myeloid leukemia (AML). AME is obtained by in-frame fusion of the AML1 and MDS1/EVI1 genes. We have previously shown that AME is a transcriptional repressor that induces leukemia in mice. In order to elucidate the role of AME in leukemic transformation, we investigated the interaction of AME with the transcription co-regulator CtBP1 and with members of the histone deacetylase (HDAC) family. In this report, we show that AME physically interacts in vivo with CtBP1 and HDAC1 and that these co-repressors require distinct regions of AME for interaction. By using reporter gene assays, we demonstrate that AME represses gene transcription by CtBP1-dependent and CtBP1-independent mechanisms. Finally, we show that the interaction between AME and CtBP1 is biologically important and is necessary for growth upregulation and abnormal differentiation of the murine hematopoietic precursor cell line 32Dc13 and of murine bone marrow progenitors.