The (8;21) translocation, found in 12% of acute myeloid leukemia (AML), creates the chimeric fusion product, AML1-ETO. Previously, we demonstrated that the ETO moiety recruits a transcription repression complex that includes the histone deacetylase (HDAC1) enzyme. Here, we used inhibitors of HDAC1 to study the pathophysiology of AML1-ETO. Both the potent inhibitor, trichostatin (TSA), and the well-known but less specific inhibitor, phenylbutyrate (PB), could partially reverse ETO-mediated transcriptional repression. PB was also able to induce partial differentiation of the AML1-ETO cell line, Kasumi-1. With the intention of developing a clinically useful protocol, we combined PB with a number of other agents that induced differentiation and apoptosis of Kasumi-1 cells. In summary, transcriptional repression mediated by AML1-ETO appears to play a mechanistic role in the t(8;21) AML, and relief of repression using agents such as PB (alone or in combination) may prove to be therapeutically useful.