The C-terminus of CBFβ-SMMHC, the fusion protein produced by a chromosome 16 inversion in acute myeloid leukemia subtype M4Eo, contains domains for self-multimerization and transcriptional repression, both of which have been proposed to be important for leukemogenesis by CBFβ-SMMHC. To test the role of the fusion protein's C-terminus in vivo, we generated knock-in mice expressing a C-terminally truncated CBFβ-SMMHC (CBFβ-SMMHCΔC95). Embryos with a single copy of CBFβ-SMMHCΔC95 were viable and showed no defects in hematopoiesis, whereas embryos homozygous for the CBFβ-SMMHCΔC95 allele had hematopoietic defects and died in mid-gestation, similar to embryos with a single-copy of the full-length CBFβ-SMMHC. Importantly, unlike mice expressing full-length CBFβ-SMMHC, none of the mice expressing CBFβ-SMMHCΔC95 developed leukemia, even after treatment with a mutagen, although some of the older mice developed a nontransplantable myeloproliferative disease. Our data indicate that the CBFβ-SMMHC's C-terminus is essential to induce embryonic hematopoietic defects and leukemogenesis.