Balanced chromosomal translocations are frequently associated with haematopoietic neoplasms and often involve genes that encode transcription factors, which play critical roles in normal haematopoiesis. Fusion oncoproteins that arise from chimeric genes generated by such translocations are usually stable and consistent molecular markers for a given disease subtype and contribute to the leukaemogenic processes. The t(12;21)(p13;q22) chromosomal translocation is the most frequent illegitimate gene recombination in paediatric cancer, occurring in approximately 25% of common (c) B-cell precursor acute lymphoblastic leukaemia (cALL) cases. The rearrangement results in the in-frame fusion of the 5' region of the ETS-related gene, TEL (ETV6), to almost the entire AML1 (RUNX1) locus and is associated with favourable prognosis following conventional therapeutic strategies. We discuss here the prenatal origins of the TEL/AML1 translocation as an initiating mutation, the role of TEL-AML1 in cellular transformation and the molecular mechanisms by which the chimeric protein imposes altered patterns of gene expression.