Chromosome condensation is essential for proper segregation of duplicated sister chromatids in mitosis. Mammalian erythroid maturation is also associated with gradual nuclear condensation. However, few proteins that are directly involved in chromosome condensation during erythropoiesis have been identified. In this report, we show that MTB (more than blood), which was initially isolated in a yeast two-hybrid screen for proteins that interact with the basic helix-loop-helix (bHLH) protein stem cell leukemia (SCL), and later identified as the murine homolog of the condensin II subunit CAP-G2, participates in erythroid cell development. MTB interacts with SCL and another hematopoietic bHLH protein, E12, and is recruited to the nucleus by SCL and E12. In addition, MTB can repress SCL/E12-mediated transcriptional activation. Consistent with the model that MTB may function together with SCL/E12 heterodimer during erythroid cell development, MTB is highly expressed in the erythroid lineage and is upregulated upon erythroid differentiation. Moreover, overexpression of MTB promotes the terminal differentiation of the murine erythroleukemia erythroid cell line. Together, these findings demonstrate that the condensin II subunit MTB/mCAP-G2 plays a novel function during erythropoiesis and suggest that key hematopoietic transcription factors such as SCL and E12 may regulate the terminal differentiation of hematopoietic cells through the interaction with condensin complexes.