Chromosomal translocation (8;21) is present in 10% to 15% of patients with acute myeloid leukemia. Expression of the AML1-ETO (AE) fusion protein alone is not sufficient to induce leukemia, but the nature of the additional genetic alterations is unknown. It is unclear whether AE facilitates acquisition of these cooperating events. We show that AE down-regulates genes involved in multiple DNA repair pathways, potentially through a mechanism involving direct binding at promoter elements, and increases the mutation frequency in vivo. AE cells display increased DNA damage in vitro and have an activated p53 pathway. This results in increased basal apoptosis and enhanced sensitivity to DNA damaging agents. Intriguingly, microarray data indicate that t(8;21) patient samples exhibit decreased expression of DNA repair genes and increased expression of p53 response genes compared with other acute myeloid leukemia (AML) patient samples. Inhibition of the p53 pathway by RNAi increases the resistance of AE cells to DNA damage. We thus speculate that AML1-ETO may facilitate accumulation of genetic alterations by suppressing endogenous DNA repair. It is possible that the superior outcome of t(8;21) patients is partly due to an activated p53 pathway, and that loss of the p53 response pathway is associated with disease progression.