MLL (mixed lineage leukemia; also ALL-1 or HRX) is a proto-oncogene that is mutated in a variety of acute leukemias. Its product is normally required for the maintenance of Hox gene expression during embryogenesis and hematopoiesis through molecular mechanisms that remain poorly defined. Here we demonstrate that MLL (mixed lineage leukemia) is proteolytically processed into 2 fragments (MLL(N) and MLL(C)) that display opposite transcriptional properties and form an intramolecular MLL complex in vivo. Proteolytic cleavage occurs at 2 amino acids (D2666 and D2718) within a consensus processing sequence (QXD/GZDD, where X is a hydrophobic amino acid and Z is an alanine or a valine) that is conserved in TRX, the Drosophila homolog of MLL, and in the MLL-related protein MLL2, suggesting that processing is important for MLL function. Processed MLL(N) and MLL(C) associate with each other via N-terminal (1253-2254 amino acids) and C-terminal (3602-3742 amino acids) intramolecular interaction domains. MLL processing occurs rapidly within a few hours after translation and is followed by the phosphorylation of MLL(C). MLL(N) displays transcriptional repression activity, whereas MLL(C) has strong transcriptional activation properties. Leukemia-associated MLL fusion proteins lack the MLL processing sites, do not undergo cleavage, and are unable to interact with MLL(C). These observations suggest that posttranslational modifications of MLL may participate in regulating its activity as a transcription factor and that this aspect of its function is perturbed by leukemogenic fusions.