Purpose To prospectively determine the prognostic significance of the TEL-AML1 fusion in children with acute lymphoblastic leukemia (ALL). Patients and Methods TEL gene status was determined for 926 patients with B-precursor ALL enrolled on the Pediatric Oncology Group ALinC 16 trials and patients were observed for a median time of 8 years. Results Rearrangements of the TEL gene were detected in 244 patients (26%). The estimated 5-year event-free survival rate (± SE) for patients with TEL rearrangements was 86% ± 2%, compared with 72% ± 2% for those with germline TEL (P < .0001). TEL rearrangements were associated with a superior outcome among patients with standard-risk ALL, high-risk ALL, and rapid early responses to therapy. In a multivariate analysis that included risk group, sex, and day 15 marrow status, TEL status was an independent predictor of outcome (P = .0002). Conclusion We conclude that TEL gene status should be incorporated into risk classification schemes and suggest that patients who have standard-risk features, the TEL-AML1 fusion, and rapid early responses to therapy, should be treated with antimetabolite-based therapy designed to maintain their high cure rates and avoid late effects.