Strategies for induction of fetal hemoglobin have been used to develop therapeutic approaches for sickle cell disease. Toward this end we examined candidate transcription factors that might alter the globin erythroid program. Special AT-rich binding protein 1 (SATB1) nuclear protein, expressed predominantly in T cells, regulates genes through targeting chromatin remodeling during T-cell maturation. We found that SATB1 protein was induced during early human adult erythroid progenitor cell differentiation concomitant with epsilon-globin expression. Erythroid differentiation of human erythroleukemia K562 cells by hemin simultaneously increased gamma-globin and down-regulated SATB1 and epsilon-globin gene expression. Chromatin immunoprecipitation revealed selective SATB1 binding in vivo in the beta-globin cluster to the hypersensitive site 2 (HS2) in the locus control region (LCR) and to the epsilon-globin promoter. SATB1 overexpression increased epsilon-globin and decreased gamma-globin gene expression accompanied by histone hyperacetylation and hypomethylation in chromatin from the epsilon-globin promoter and HS2, and histone hypoacetylation and hypermethylation associated with the gamma-globin promoter. SATB1 formed a complex with CREB-binding protein (CBP) important in transcriptional activation. The SATB1 dependent increase in epsilon-promoter activity was amplified by CBP and blocked by E1A, a CBP inhibitor. These data suggest that SATB1 can up-regulate the epsilon-globin gene by interaction with specific sites in the beta-globin cluster and imply that SATB1 family protein expressed in the erythroid progenitor cells may have a role in globin gene expression during early erythroid differentiation. Tal1/SCL is a basic helix-loop-helix protein that is critical for normal hematopoiesis and required for erythroid differentiation. Searching for specific Tal1/SCL binding sites in erythroid cells that may reveal potential interactions with the globin cluster or other erythroid specific genes, we identified a 0.4-kb genomic DNA fragment containing two Tal1/SCL binding E-boxes and GATA- and SATB1-binding motifs (EEGS) that localized to the pericentromeric region. This sequence has high homology to satellite 2 DNA. We found that Tal1/SCL could complex with the histone H3 lysine 9 (H3K9)-specific methyltransferase Suv39H1 that is important in pericentric heterochromatin formation, and that binding of Tal1/SCL to EEGS chromatin correlated with hypermethylation of H3K9 and the association of heterochromatin protein HP1 to this region. EEGS affected transcription repression in a Tal1/SCL dependent manner that was accompanied by increased H3K9 methylation. A specific histone deacetylase inhibitor, trichostatin A, relieved Tal1/SCL-mediated repression by EEGS. These results reveal a novel mechanism of action for Tal1/SCL during erythroid differentiation and implicate heterochromatin-like silencing via a cis-acting binding motif for transcriptional repression.