Transcriptional regulators are recurrently altered through translocations, deletions, or aberrant expression in acute myeloid leukemia (AML). Although critically important in leukemogenesis, the underlying pathogenetic mechanisms they trigger remain largely unknown. Here, we identified that Id1 (inhibitor of DNA binding 1) plays a pivotal role in acute myeloid leukemogenesis. Using genetically modified mice, we found that loss of Id1 inhibited t(8;21) leukemia initiation and progression in vivo by abrogating protein kinase B (AKT)1 activation, and that Id1 interacted with AKT1 through its C terminus. An Id1 inhibitor impaired the in vitro growth of AML cells and, when combined with an AKT inhibitor, triggered even greater apoptosis and growth inhibition, whereas normal hematopoietic stem/progenitor cells were largely spared. We then performed in vivo experiments and found that the Id1 inhibitor significantly prolonged the survival of t(8;21)(+) leukemic mice, whereas overexpression of activated AKT1 promoted leukemogenesis. Thus, our results establish Id1/Akt1 signaling as a potential therapeutic target in t(8;21) leukemia.