TAL1 (also known as SCL) is expressed in >40% of human T cell acute lymphoblastic leukemias (T-ALLs). TAL1 encodes a basic helix-loop-helix transcription factor that can interfere with the transcriptional activity of E2A and HEB during T cell leukemogenesis; however, the oncogenic pathways directly activated by TAL1 are not characterized. In this study, we show that, in human TAL1–expressing T-ALL cell lines, TAL1 directly activates NKX3.1, a tumor suppressor gene required for prostate stem cell maintenance. In human T-ALL cell lines, NKX3.1 gene activation is mediated by a TAL1–LMO–Ldb1 complex that is recruited by GATA-3 bound to an NKX3.1 gene promoter regulatory sequence. TAL1-induced NKX3.1 activation is associated with suppression of HP1-α (heterochromatin protein 1 α) binding and opening of chromatin on the NKX3.1 gene promoter. NKX3.1 is necessary for T-ALL proliferation, can partially restore proliferation in TAL1 knockdown cells, and directly regulates miR-17-92. In primary human TAL1-expressing leukemic cells, the NKX3.1 gene is expressed independently of the Notch pathway, and its inactivation impairs proliferation. Finally, TAL1 or NKX3.1 knockdown abrogates the ability of human T-ALL cells to efficiently induce leukemia development in mice. These results suggest that tumor suppressor or oncogenic activity of NKX3.1 depends on tissue expression.