While much is known about aberrant pathways affecting cell growth and apoptosis, our understanding of another critical step of neoplastic transformation, differentiation arrest, remains poor. The differentiation-inducing transcription factor CCAAT enhancer binding protein alpha (C/EBPalpha) is required for proper control of adipogenesis, glucose metabolism, granulocytic differentiation, and lung development. Studies investigating the function of this protein in hematopoietic malignancies as well as in lung and skin cancer have revealed numerous ways how tumor cells abrogate C/EBPalpha function. Genetic and global expression analysis of acute myeloid leukemia (AML) cases identifies C/EBPalpha-deficient AML as a separate entity yielding novel classification schemes. In patients with a dysfunctional C/EBPalpha pathway, targeted therapies may overcome the block in differentiation, and in combination with conventional chemotherapy, may lead to complete eradication of the malignant clone. Overall, a better understanding of the mechanisms of how C/EBPalpha dysregulation participates in the neoplastic process has opened new gateways for differentiation biology research.