We have designed a chimeric gene, Id-SCL, in which the 3' helix-loop-helix encoding portion of the presumptive oncogene SCL/tal is joined to the 5' coding portion of Id, an inhibitory helix-loop-helix gene. The predicted protein product of this chimeric gene contains the helix-loop-helix dimerization domain of SCL/tal, but, lacking a basic DNA binding domain, is predicted to have the inhibitory function of the Id product. Expression of the Id-SCL fusion gene in stably transfected K562 cells reproducibly resulted in nuclear segmentation and depressed growth rates; both of these phenotypic effects demonstrated a dosage dependence on the levels of Id-SCL mRNA and protein expressed in the various clones. Electron microscopy of cells expressing high levels of Id-SCL mRNA showed a significant increase in cytoplasmic perinuclear thin filaments and diminution of marginal heterochromatin in the nuclei. No other changes in hematopoietic differentiation status were observed in association with Id-SCL expression. Expression of intact Id and SCL/tal genes, as well as deletion mutants of Id and SCL/tal, independently transfected into K562 cells, indicated that the nuclear segmentation effect is dependent on the presence of a protein possessing a helix-loop-helix domain but lacking a basic domain. Our studies suggest that the balance of transcriptional inhibitory and stimulatory helix-loop-helix proteins in cells may be important determinants of proliferation and of structural organization within cells.