Transcription factors of the AML (core binding factor-alpha/polyoma enhancer binding protein 2) class are key transactivators of tissue-specific genes of the hematopoietic and bone lineages. Alternative splicing of the AML-1 gene results in two major AML variants, AML-1 and AML-1B. We show here that the transcriptionally active AML-1B binds to the nuclear matrix, and the inactive AML-1 does not. The association of AML-1B with the nuclear matrix is independent of DNA binding and requires a nuclear matrix targeting signal (NMTS), a 31 amino acid segment near the C terminus that is distinct from nuclear localization signals. A similar NMTS is present in AML-2 and the bone-related AML-3 transcription factors. Fusion of the AML-1B NMTS to the heterologous GAL4-(1-147) protein directs GAL4 to the nuclear matrix. Thus, the NMTS is necessary and sufficient to target the transcriptionally active AML-1B to the nuclear matrix. The loss of the C-terminal domain of AML-1B is a frequent consequence of the leukemia-related t(8;21) and t(3;21) translocations. Our results suggest this loss may be functionally linked to the modified interrelationships between nuclear structure and gene expression characteristic of cancer cells.