Pbx-regulating protein-1 (Prep1) is a tumor suppressor, whereas myeloid ecotropic viral integration site-1 (Meis1) is an oncogene. We show that, to perform these activities in mouse embryonic fibroblasts, both proteins competitively heterodimerize with pre-B-cell leukemia homeobox-1 (Pbx1). Meis1 alone transforms Prep1-deficient fibroblasts, whereas Prep1 overexpression inhibits Meis1 tumorigenicity. Pbx1 can, therefore, alternatively act as an oncogene or tumor suppressor. Prep1 posttranslationally controls the level of Meis1, decreasing its stability by sequestering Pbx1. The different levels of Meis1 and the presence of Prep1 are followed at the transcriptional level by the induction of specific transcriptional signatures. The decrease of Meis1 prevents Meis1 interaction with Ddx3x and Ddx5, which are essential for Meis1 tumorigenesis, and modifies the growth-promoting DNA binding landscape of Meis1 to the growth-controlling landscape of Prep1. Hence, the key feature of Prep1 tumor-inhibiting activity is the control of Meis1 stability.