Nuclear receptor corepressor (CoR)-histone deacetylase (HDAC) complex recruitment is indispensable for the biological activities of the retinoic acid receptor fusion proteins of acute promyelocytic leukemias. We report here that ETO (eight-twenty-one or MTG8), which is fused to the acute myelogenous leukemia 1 (AML1) transcription factor in t(8;21) AML, interacts via its zinc finger region with a conserved domain of the corepressors N-CoR and SMRT and recruits HDAC in vivo. The fusion protein AML1-ETO retains the ability of ETO to form stable complexes with N-CoR/SMRT and HDAC. Deletion of the ETO C terminus abolishes CoR binding and HDAC recruitment and severely impairs the ability of AML1-ETO to inhibit differentiation of hematopoietic precursors. These data indicate that formation of a stable complex with CoR–HDAC is crucial to the activation of the leukemogenic potential of AML1 by ETO and suggest that aberrant recruitment of corepressor complexes is a general mechanism of leukemogenesis.