Activation of the basic helix-loop-helix (bHLH) gene TAL1 is the most common genetic event seen in both childhood and adult T cell acute lymphoblastic leukemia (T-ALL). Despite recent success in treating T-ALL patients, TAL1 patients do not respond well to current therapies. In hopes of leading the way to better therapies for these patients, we have sought to determine the mechanism(s) of Tal1 induced leukemia in mice. By generating a DNA-binding mutant Tal1 transgenic mouse we have determined that the DNA binding activity of Tal1 is not required to induce leukemia. We have also shown that Tal1 expression in the thymus affects thymocyte development and survival. We demonstrate that Tal1 heterodimerizes with the class I bHLH proteins E47 and HEB in our mouse models of TAL1 induced leukemia. Severe thymocyte differentiation arrest and disease acceleration in Tal1/E2A+/- and Tal1/HEB+/- mice provides genetic evidence that Tal1 causes leukemia by inhibiting the function of the transcriptional activators E47 and HEB which have been previously shown to be important in T cell development. In pre-leukemic Tal1 thymocytes, we find the co-repressor mSin3A/HDAC1 bound to the CD4 enhancer, whereas an E47/HEB/p300 complex is detected in wild type thymocytes. Furthermore, mouse Tal1 tumors are sensitive to pharmacologic inhibition of HDAC and undergo apoptosis. These data demonstrate that Tal1 induces T cell leukemia by repressing the transcriptional activity of E47/HEB and suggests that HDAC inhibitors may prove efficacious in T-ALL patients that express TAL1.