Acute myeloid leukemia (AML) is still associated with a mortality of 60 to 80%. AML is characterized by a block in myeloid differentiation. The transcription factors PU.1 and C/EBP alpha are responsible for normal myeloid differentiation from stem cells to monocytes or granulocytes. In particular, PU.1 induces expression of the macrophage colony-stimulating factor (M-CSF) receptor and the development of monocytes, whereas C/EBP alpha increases the expression of the granulocyte colony-stimulating factor (G-CSF) receptor and leads to mature granulocytes. In AML, chromosomal aberrations result in oncoproteins such as AML1/ETO, PML/RAR alpha, or activated Ras, which can deregulate genes important for normal myelopoiesis. Thus, AML1/ETO can bind to the transcription factor C/EBP alpha, inhibit C/EBP alpha-dependent transcription, and block granulocytic differentiation. However, AML1/ETO can also synergize with the transcription factor AML1 to enhance the activity of the M-CSF receptor promoter. On the other hand, the PML/RAR alpha fusion protein causes transcriptional repression by recruiting the nuclear corepressor (N-CoR) histone deacetylase complex to the DNA, which results in decreased histone acetylation and a repressive chromatin organization. Here we describe methods to investigate whether and how signaling agonists induce myeloid differentiation and how oncoproteins might cause AML by modulating the activity of transcription factors that are pivotal for normal myeloid development. (C) 1999 Academic Press.