The translocation t (12; 22)(p13; q11) creates an MN1-TEL fusion gene leading to acute myeloid leukemia. MN1 is a transcription coactivator of the retinoic acid and vitamin D receptors, and TEL (ETV6) is a member of the E26-transformation-specific family of transcription factors. In MN1-TEL, the transactivating domains of MN1 are combined with the DNA-binding domain of TEL. We show that MN1-TEL inhibits retinoic acid receptor (RAR)-mediated transcription, counteracts coactivators such as p160 and p300, and acts as a dominant-negative mutant of MN1. Compared to MN1, the same transactivation domains in MN1-TEL are poorly stimulated by p160, p300 or histone deacetylase inhibitors, indicating that the block of RAR-mediated transcription by MN1-TEL is caused by dysfunctional transactivation domains rather than by recruitment of corepressors. The mechanism leading to myeloid leukemia in t (12; 22) thus differs from the translocations that involve RAR itself.