The translocation t(15;17) generates the chimeric PML-RARalpha transcription factor that is the initiating event of acute promyelocytic leukemia. A global view of PML-RARalpha transcriptional functions was obtained by genome-wide binding and chromatin modification analyses combined with genome-wide expression data. Chromatin immunoprecipitation (ChIP)-chip experiments identified 372 direct genomic PML-RARalpha targets. A subset of these was confirmed in primary acute promyelocytic leukemia. Direct PML-RARalpha targets include regulators of global transcriptional programs as well as critical regulatory genes for basic cellular functions such as cell-cycle control and apoptosis. PML-RARalpha binding universally led to HDAC1 recruitment, loss of histone H3 acetylation, increased tri-methylation of histone H3 lysine 9, and unexpectedly increased trimethylation of histone H3 lysine 4. The binding of PML-RARalpha to target promoters and the resulting histone modifications resulted in mRNA repression of functionally relevant genes. Taken together, our results reveal that the transcription factor PML-RARalpha regulates key cancer-related genes and pathways by inducing a repressed chromatin formation on its direct genomic target genes.