The gene encoding for core-binding factor β (CBFβ) is altered in acute myeloid leukemia samples with an inversion in chromosome 16, expressing the fusion protein CBFβ-SMMHC. Previous studies have shown that this oncoprotein interferes with hematopoietic differentiation and proliferation and participates in leukemia development. In this study, we provide evidence that Cbfβ modulates the oncogenic function of this fusion protein. We show that Cbfβ plays an important role in proliferation of hematopoietic progenitors expressing Cbfβ-SMMHC in vitro. In addition, Cbfβ-SMMHC–mediated leukemia development is accelerated in the absence of Cbfβ. These results indicate that the balance between Cbfβ and Cbfβ-SMMHC directly affects leukemia development, and suggest that CBF-specific therapeutic molecules should target CBFβ-SMMHC function while maintaining CBFβ activity. (Cancer Res 2006; 66(23): 11214-8)