Acute promyelocytic leukaemia (APL), associated with chromosomal translocations involving the retinoic acid receptor α gene (RARA) and the PML gene, is sensitive to retinoic acid (RA) treatment, while APL patients harbouring translocations between RARA and the PLZF gene do not respond to RA. We have generated PML-RARA and PLZF-RARA transgenic mice and show here that these fusion proteins play a critical role in leukaemogenesis and in determining responses to RA in APL, because PLZF-RARA transgenic mice develop RA-resistant leukaemia, while PML-RARA mice are responsive to RA treatment. We demonstrate that both PML-RARα and PLZF-RARα fusion proteins can act as transcriptional repressors and are able to interact with nuclear receptor transcriptional co-repressors, such as SMRT. PLZF-RARα, but not PML-RARα, can form, via its PLZF moiety, co-repressor complexes which are insensitive to RA. Histone deacetylase inhibitors such as Trichostatin A (TSA), in combination with RA, can overcome the transcriptional repressor activity of PML-RARα and PLZF-RARα as well as the unresponsiveness of PLZF-RARα-expressing leukaemic cells to RA. Thus, our findings unravel a crucial role for transcriptional silencing in APL pathogenesis and resistance to RA in APL.