Abstract An undifferentiated status and the epigenetic inactivation of tumor-suppressor genes are hallmarks of transformed cells. Promoter CpG island hypermethylation of differentiating genes, however, has rarely been reported. The Groucho homologue Transducin-like Enhancer of Split 1 (TLE1) is a multitasked transcriptional corepressor that acts through the acute myelogenous leukemia 1, Wnt, and Notch signaling pathways. We have found that TLE1 undergoes promoter CpG island hypermethylation–associated inactivation in hematologic malignancies, such as diffuse large B-cell lymphoma and AML. We also observed a mutual exclusivity of the epigenetic alteration of TLE1 and the cytogenetic alteration of AML1. TLE1 reintroduction in hypermethylated leukemia/lymphoma cells causes growth inhibition in colony assays and nude mice, whereas TLE1-short hairpin RNA depletion in unmethylated cells enhances tumor growth. We also show that these effects are mediated by TLE1 transcriptional repressor activity on its target genes, such as Cyclin D1, Colony-Stimulating Factor 1 receptor, and Hairy/Enhancer of Split 1. These data suggest that TLE1 epigenetic inactivation contributes to the development of hematologic malignancies by disrupting critical differentiation and growth-suppressing pathways. [Cancer Res 2008;68(11):4116–22]