Erythropoietin stimulates transcription of the TAL1/SCL gene and phosphorylation of its protein products. Activation of the TAL1 (or SCL) gene, originally identified through its involvement by a recurrent chromosomal translocation, is the most frequent molecular lesion recognized in T-cell acute lymphoblastic leukemia. The protein products of this gene contain the basic-helix-loop-helix motif characteristic of a large family of transcription factors that bind to the canonical DNA sequence CANNTG as protein heterodimers. TAL1 expression by erythroid cells in vivo and in chemical-induced erythroleukemia cell lines in vivo suggested the gene might regulate aspects of erythroid differentiation. Since the terminal events of erythropoiesis are controlled by the glycoprotein hormone erythropoietin (Epo), we investigated whether the expression or activity of the TAL1 gene and its protein products were affected by Epo in splenic erythroblasts from mice infected with an anemia-inducing strain of Friend virus (FVA cells). Epo elicited a rapid, dose-related increase in TAL1 mRNA by increasing transcription of the gene and stabilizing one of its mRNAs. An Epo-inducible TAL1 DNA binding activity was identified in FVA cell nuclear extracts that subsequently decayed despite accumulating mRNA and protein. Induction of DNA binding activity was associated temporally with Epo-induced phosphorylation of nuclear TAL1 protein. These results indicate that Epo acts at both transcriptional and posttranscriptional levels on the TAL1 locus in Friend virus-induced erythroblasts and establish a link between Epo signaling mechanisms and a member of a family of transcription factors involved in the differentiation of diverse cell lineages.