The fusion gene CBFB-MYH11 is generated by the chromosome 16 inversion associated with acute myeloid leukemias. This gene encodes a chimeric protein involving the core binding factor β (CBFβ) and the smooth-muscle myosin heavy chain (SMMHC). Mouse model studies suggest that this chimeric protein CBFβ-SMMHC dominantly suppresses the function of CBF, a heterodimeric transcription factor composed of DNA binding subunits (CBFα1 to 3) and a non-DNA binding subunit (CBFβ). This dominant suppression results in the blockage of hematopoiesis in mice and presumably contributes to leukemogenesis. We used transient-transfection assays, in combination with immunofluorescence and green fluorescent protein-tagged proteins, to monitor subcellular localization of CBFβ-SMMHC, CBFβ, and CBFα2 (also known as AML1 or PEBP2αB). When expressed individually, CBFα2 was located in the nuclei of transfected cells, whereas CBFβ was distributed throughout the cell. On the other hand, CBFβ-SMMHC formed filament-like structures that colocalized with actin filaments. Upon cotransfection, CBFα2 was able to drive localization of CBFβ into the nucleus in a dose-dependent manner. In contrast, CBFα2 colocalized with CBFβ-SMMHC along the filaments instead of localizing to the nucleus. Deletion of the CBFα-interacting domain within CBFβ-SMMHC abolished this CBFα2 sequestration, whereas truncation of the C-terminal-end SMMHC domain led to nuclear localization of CBFβ-SMMHC when coexpressed with CBFα2. CBFα2 sequestration by CBFβ-SMMHC was further confirmed in vivo in a knock-in mouse model. These observations suggest that CBFβ-SMMHC plays a dominant negative role by sequestering CBFα2 into cytoskeletal filaments and aggregates, thereby disrupting CBFα2-mediated regulation of gene expression.