Ectopic expression of LIM-only protein 2 (LMO2) in T-cells, as a result of chromosomal translocations or retroviral insertion, plays an important role in the onset of T-cell leukemias. Two transcripts of LMO2 gene (LMO2-a and LMO2-b) have been reported to encode a same 158-amino-acid protein. We have previously reported a novel transcript of human LMO2 gene (LMO2-c) encoding a 151-amino-acid protein, and defined its promoter region. In the present study, we investigated the regulation of the LMO2-c expression and the functions of LMO2-c. We found that LMO2-c expression is regulated by the cooperation of two essential hematopoietic transcription factors GATA-1 and PU.1 in various hematopoietic cell lines, suggesting an important functional role for LMO2-c in the hematopoietic system. More importantly, we demonstrated that LMO2-c acts as an antagonist of LMO2-a/b binding to its partners, therefore blocking the transactivation of LMO2-a/b on its target genes. These findings provide novel evidence to the functions of LMO2 gene in the hematopoietic system and leukemia.