The chromosomal inversion (16)(p13q22), which is associated with the M4-eosinophilia subtype of human acute myeloid leukemia, causes the fusion of two distinct genes. The polypeptide encoded by the chimeric gene, PEBP2 beta/CBF beta-SMMHC, retains the ability to interact with, and dominantly interfere with the function of proteins possessing the Runt homology domain. The Runt protein homologs constitute the DNA binding subunit of the PEBP2/CBF transcription factor. We examined the subcellular localization of PEBP2 beta/CBF beta-SMMHC, as well as that of Runt protein homologs in leukemic cells carrying inversion 16 by immunoblot analysis. A significant amount of the PEBP2 beta/CBF beta-SMMHC protein was recovered from the nuclear fraction along with the Runt protein homologs. Furthermore, some of both polypeptides was retained in the DNA pellet that represents the material remaining after extraction of nuclear fraction with high salt. These observations suggest that the so-called dominant interfering effect of PEBP2 beta/CBF beta-SMMHC on PEBP2/CBF occurs inside the nucleus. In addition, we could detect PEBP2 beta/CBF beta-SMMHC in the cytoplasmic membrane fraction as well. The function of this membrane-located PEBP2 beta/CBF beta-SMMHC, if any, appears to be unrelated to that of Runt protein homologs.