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The PML‐RARα fusion gene, generated by the t(15;17) chromosome translocation, is regarded as the initiating factor of acute promyelocytic leukaemia (APL). In addition to the well‐known effects on blocking myeloid differentiation at the promyelocytic stage, promyelocytic leukaemia‐retinoic acid receptor α (PML‐RARα) has also been reported to interfere with multiple differentiation processes, including erythroid differentiation. However, the detailed molecular mechanism by which PML‐RARα impairs erythropoiesis has not yet been fully addressed. By chromatin immunoprecipitation‐PCR assay, we found that PML‐RARα bound to the distal promoter region of LMO2 (LIM‐only protein 2), a critical erythroid‐specific transcription factor. Luciferase reporter assays and qRT‐PCR results demonstrated that PML‐RARα down‐regulated the expression of the LMO2 distal transcript through transrepressing its promoter activity. Analysis of gene expression profiling data from large cohorts of acute myeloid leukaemia (AML) patients confirmed that LMO2 expressed at a markedly lower level in APL patients in comparison to non‐APL AML patients. Further flow cytometry analysis demonstrated that PML‐RARα inhibited erythropoietin‐induced erythroid differentiation by down‐regulating LMO2 expression. Our findings reveal a previously unidentified mechanism, by which PML‐RARα interferes with erythropoiesis through directly targeting and transrepressing LMO2 expression in the development of APL. [ABSTRACT FROM AUTHOR]