The fusion gene CBFB-MYH11 is generated by the chromosome 16 inversion associated with acute myeloid leukemias. This gene encodes a chimeric protein involving the core binding factor beta (CBF beta) and the smooth-muscle myosin heavy chain (SMMHC). Mouse model studies suggest that this chimeric protein CBF beta-SMMHC dominantly suppresses the function of CBF, a heterodimeric transcription factor composed of DNA binding subunits (CBF alpha 1 to 3) and a non-DNA binding subunit (CBF beta). This dominant suppression results in the blockage of hematopoiesis in mice and presumably contributes to leukemogenesis, We used transient-transfection assays, in combination with immunofluorescence and green fluorescent protein-tagged proteins, to monitor subcellular localization of CBF beta-SMMHC, CBF beta, and CBF alpha 2 (also known as AML1 or PEBP2 alpha B). When expressed individually, CBF alpha 2 was located in the nuclei of transfected cells, whereas CBF beta was distributed throughout the cell. On the other hand, CBF beta-SMMHC formed filament-like structures that colocalized with actin filaments, Upon cotransfection, CBF alpha 2 was able to drive localization of CBF beta into the nucleus in a dose-dependent manner. In contrast, CBF alpha 2 colocalized with CBF beta-SMMHC along the filaments instead of localizing to the nucleus. Deletion of the CBF alpha-interacting domain within CBF beta-SMMHC abolished this CBF alpha 2 sequestration, whereas truncation of the C-terminal-end SMMHC domain led to nuclear localization of CBF beta-SMMHC when coexpressed with CBF alpha 2. CBF alpha 2 sequestration by CBF beta-SMMHC was further confirmed in vivo in a knock-in mouse model. These observations suggest that CBF beta-SHMMC plays a dominant negative role by sequestering CBFa2 into cytoskeletal filaments and aggregates, thereby disrupting CBF alpha 2-mediated regulation of gene expression.