The TAL1 (or SCL) gene, originally identified from its involvement by a recurrent chromosomal translocation, encodes a basic helix-loop-helix transcription factor essential for erythropoiesis. Although presumed to regulate transcription, its target genes are largely unknown. We show here that a nuclear complex containing TAL1, its DNA-binding partner E47, zinc finger transcription factor GATA-1, LIM domain protein LMO2, and LIM domain-binding protein Ldb1 transactivates the protein 4.2 (P4.2) gene through two E box GATA elements in its proximal promoter. Binding of this complex to DNA was dependent on the integrity of both E box and GATA sites and was demonstrated to occur on the P4.2 promoter in cells. Maximal transcription in transiently transfected cells required both E box GATA elements and expression of all five components of the complex. This complex was shown, in addition, to be capable of linking in solution double-stranded oligonucleotides corresponding to the two P4.2 E box GATA elements. This DNA-linking activity required Ldb1 and increased with dimethyl sulfoxide-induced differentiation of murine erythroleukemia (MEL) cells. In contrast, enforced expression in MEL cells of dimerization-defective mutant Ldb1, as well as wild-type Ldb1, significantly decreased E box GATA DNA-binding activities, P4.2 promoter activity, and accumulation of P4.2 and beta-globin mRNAs. These studies define a physiologic target for a TAL1- and GATA-1-containing ternary complex and reveal a positive role for Ldb1 in erythroid gene expression and differentiation.