Tal1/SCL is a basic helix-loop-helix transcription factor critical for normal hematopoiesis. To understand the mechanisms underlying transcriptional regulation by Tal1/SCL, we combined an in vitro DNA binding strategy and an in vivo chromatin immunoprecipitation analysis to search for Tal1/SCL target regions in K562 erythroleukemia cells. A 0.4-kb genomic DNA clone containing two Tal1/SCL binding E-boxes and GATA- and SATB1-binding motifs (EEGS) was identified that localized to the pericentromeric region with high homology to satellite 2 DNA. Pericentric DNA is related to heterochromatin and gene inactivation. We found that Tal1/SCL could complex with the histone H3 lysine 9 (H3K9)-specific methyltransferase Suv39H1. Binding of Tal1/SCL to EEGS chromatin correlated with hypermethylation of H3K9 and the association of heterochromatin protein HP1 to this region. In Rep4 reporter gene assays, EEGS affected repression in a manner dependent on the expression level of Tal1/SCL that was accompanied by increased H3K9 methylation in chromatin associated with EEGS and a linked promoter. A specific histone deacetylase inhibitor, trichostatin A, relieved Tal1/SCL-mediated repression by EEGS. In addition, SATB1 bound EEGS chromatin and promoted Tal1/SCL EEGS-dependent repression. We expand the list of potential interacting partners for Tal1/SCL by demonstrating direct associations of Tal1/SCL with SATB1 and with Suv39H1. These results reveal a novel mechanism of action for Tal1/SCL and implicate heterochromatin-like silencing via a cis-acting binding motif for transcriptional repression.