The t(16;21)(p11;q22) translocation is a recurrent chromosomal abnormality found in several types of myeloid leukemia. We have previously demonstrated that the breakpoints of this translocation are clustered in a specific intron of the ERG gene on chromosome 21, which has recently been reported to be involved in Ewing's sarcoma. We show here that the TLS/FUS gene on chromosome 16 is fused with the ERG gene to produce the TLS/FUS-ERG chimeric transcript by this translocation. The TLS/FUS gene has been identified as a translocated gene in myxoid liposarcoma by the t(12;16)(q13;p11) translocation and encodes an RNA-binding protein that is highly homologous to the product of the EWS gene involved in Ewing's sarcoma. Thus, the TLS/FUS-ERG gene fusion in t(16;21) leukemia is predicted to produce a protein that is very similar to the EWS-ERG chimeric protein responsible for Ewing's sarcoma.