Several transcription factors have been implicated as playing a role in myelopoiesis. PU.1, an ets-family transcription factor, is required for the development of myeloid and lymphoid lineages, whereas the transcription factor CCAAT-enhancer binding protein family member C/EBPalpha is essential for granulocyte development. We present here the first evidence that C/EBPalpha blocks the function of PU.1. PU.1 and C/EBPalpha interact physically and colocalize in myeloid cells. As a consequence of this interaction, C/EBPalpha can inhibit the function of PU.1 to activate a minimal promoter containing only PU.1 DNA-binding sites. We further demonstrate that the leucine zipper in the DNA-binding domain of C/EBPalpha interacts with the beta3/beta4 region in the DNA-binding domain of PU.1 and as a result displaces the PU.1 coactivator c-Jun. Finally, C/EBPalpha blocks PU.1-induced dendritic cell development from CD34+ human cord blood cells. The functional blocking of PU.1 by C/EBPalpha could be the mechanism by which C/EBPalpha inhibits cell fates specified by PU.1 and directs cell development to the granulocyte lineage.