The MLL gene located on chromosome 11q23 and its translocation to the AF-4 gene located on chromosome 4q21 play a pivotal role in leukemogenesis in infancy. Studies of identical leukemic twins have provided evidence of the MLL rearrangement as a fetal event during pregnancy. We analyzed the presence and frequency of the MLL/AF-4 rearrangement in normal cord blood. Although no chimeric mRNA of MLL or AF-4 was detected in 65 cord blood samples, in-frame fusion transcripts of exon 11 and exon 4 or 5 of the AF-4 gene were detected in three of the samples by a nested polymerase chain reaction. When primers of exon 11 and exon 5 of the AF-4 gene were used, two forms of fusion transcripts (AF-4 exon 11/4 or exon 11/5) were detected in 20 of the 65 cord blood samples (31%) and also four of six leukemic cell samples with t(4;11) (67%), whereas such transcripts were not observed in any of 21 peripheral blood samples nor in fetal fibroblasts. These findings suggest that the in-frame fusion of exon 11 and exon 4 or 5 of the AF-4 gene frequently occurs in hematopoietic cells during the intrauterine period, even in a healthy fetus. Although it is unknown whether the proteins of the AF-4 fusion transcripts have some functions, the instability of the AF-4 gene may be associated with the leukemogenesis of infant leukemia.