Chromosomal translocation t(11;17)(q23;21) is associated with a retinoic acid-resistant form of acute promyelocytic leukemia. The translocation fuses the RARalpha gene to the PLZF gene, resulting in the formation of reciprocal fusion proteins, hypothesized to play prominent roles in leukemogenesis. Promyelocytic leukemia zinc finger (PLZF) encodes a transcription factor with nine Krüppel-like zinc fingers, seven of which are retained in the t(11;17) fusion protein RARalpha-PLZF. We identified a specific DNA-binding site for the PLZF protein and showed that PLZF binds to this site through its most carboxyl seven zinc fingers. In co-transfection experiments, PLZF repressed transcription through its cognate binding site. This repression function of PLZF was mapped to two regions on the protein, including the evolutionarily conserved POZ domain. In contrast, the RARalpha-PLZF protein activated transcription of a promoter containing a PLZF response element. These results suggest that RARalpha-PLZF, generated in acute promyelocytic leukemia, is an aberrant transcription factor that can deregulate the expression of PLZF target genes and contribute to leukemogenesis.