The Runt related transcription factors RUNX (AML/CBF(alpha)/PEBP2(alpha)) are key regulators of hematopoiesis and osteogenesis. Using co-transfection experiments with four natural promoters, including those of the osteocalcin (OC), multi drug resistance (MDR), Rous Sarcoma Virus long terminal repeat (LTR), and bone sialoprotein (BSP) genes, we show that each of these promoters responds differently to the forced expression of RUNX proteins. However, the three RUNX subtypes (i.e. AML1, AML2, and AML3) regulate each promoter in a similar manner. Although the OC promoter is activated in a C terminus dependent manner, the MDR, LTR and BSP promoters are repressed by three distinct mechanisms, either independent of or involving the AML C terminus, or requiring only the conserved C-terminal pentapeptide VWRPY. Using yeast two hybrid assays we find that the C terminus of AML1 interacts with a Groucho/TLE/R-esp repressor protein. Co-expression assays reveal that TLE proteins repress AML dependent activation of OC gene transcription. Western and northern blot analyses suggest that TLE expression is regulated reciprocally with the levels of OC gene expression during osteoblast differentiation. Digital immunofluorescence microscopy results show that TLE1 and TLE2 are both associated with the nuclear matrix, and that a significant subset of each colocalizes with AML transcription factors. This co-localization of TLE and AML proteins is lost upon removing the C terminus of AML family members. Our findings indicate that suppression of AML-dependent gene activation by TLE proteins involves functional interactions with the C terminus of AML at the nuclear matrix in situ. Our data are consistent with the concept that the C termini of AML proteins support activation or repression of cell-type specific genes depending on the regulatory organization of the target promoter and subnuclear localization.