The paired box domain of PAX5 was reported to fuse with the sequence of promyelocytic leukemia (PML) to produce PAX5-PML chimeric protein in two patients with B-cell acute lymphoblastic leukemia. In the present studies, we found, by gel shift assays, that PAX5-PML bound to a panel of PAX5-consensus sequence acts as a homodimer with reduction of its DNA-binding affinities in comparison with wild-type PAX5. In transient transfection assays using 293T and HeLa cells, and retrovirus transduction of murine hematopoietic stem/progenitor cells together with quantitative real-time polymerase chain reaction analysis, PAX5-PML inhibited wild-type PAX5 target gene transcriptional activity. Studies comparing PAX5-PML with PAX5-PML(ΔCC) demonstrated that the coiled-coil (CC) protein interaction domain located within the PML moiety was required for PAX5-PML homodimer complex formation and partial transcriptional repression of genes controlled by PAX5. Fluorescent microscopic examination of transiently expressed YFP-tagged proteins in HeLa and 293T cells demonstrated that YFP-PAX5-PML and YFP-PAX5-PML(ΔCC) exhibited a diffuse granular pattern within the nucleus, similar to PAX5 but not PML. By fluorescent recovery after photobleach (FRAP), we have shown that PAX5-PML fusion protein has reduced intranuclear mobility compared with wild-type PAX5. Furthermore, the dimerization domain (CC) of PML was responsible for the reduced intranuclear mobility of PAX5-PML. These results indicate that the CC domain of PAX5-PML is important for each of the known activities of PAX5-PML fusion proteins.