The ALL-1 gene is involved in translocations with many partner genes in different types of the acute leukemias, but it is not clear whether it acts as an oncogene or whether the fusion proteins resulting from the translocations have dominant negative effects. To distinguish between these two possibilities, we analyzed the ability of wild-type AB2.1 embryonal stem (ES) cells and of single or double ALL-1 gene knockout cells derived from them to differentiate along hematopoietic lineages after withdrawal of leukemia inhibitory factor, using in vitro colony formation assays. All-1 double knockout ES cells formed a significantly greater number of colonies with faster kinetics than wild-type and ALL-1 single knockout ES cells. Parental ES cells formed lineage-restricted colonies, whereas single and double knockout ES cells developed, at high frequency, immature and/or "biphenotypic" colonies, mimicking the aberrant hematopoiesis typical of leukemic patients. These data are consistent with the possibility that loss of function of the ALL-1 gene is important in leukemogenesis.