Leukemia-associated chimeric oncoproteins often act as transcriptional repressors, targeting promoters of master genes involved in hematopoiesis. We show that CRABPI (encoding cellular retinoic acid binding protein I) is a target of PLZF, which is fused to RARalpha by the t(11;17)(q23;q21) translocation associated with retinoic acid (RA)-resistant acute promyelocytic leukemia (APL). PLZF represses the CRABPI locus through propagation of chromatin condensation from a remote intronic binding element culminating in silencing of the promoter. Although the canonical, PLZF-RARalpha oncoprotein has no impact on PLZF-mediated repression, the reciprocal translocation product RARalpha-PLZF binds to this remote binding site, recruiting p300, inducing promoter hypomethylation and CRABPI gene up-regulation. In line with these observations, RA-resistant murine PLZF/RARalpha+RARalpha/PLZF APL blasts express much higher levels of CRABPI than standard RA-sensitive PML/RARalpha APL. RARalpha-PLZF confers RA resistance to a retinoid-sensitive acute myeloid leukemia (AML) cell line in a CRABPI-dependent fashion. This study supports an active role for PLZF and RARalpha-PLZF in leukemogenesis, identifies up-regulation of CRABPI as a mechanism contributing to retinoid resistance, and reveals the ability of the reciprocal fusion gene products to mediate distinct epigenetic effects contributing to the leukemic phenotype.