Internal tandem duplication (ITD) mutations in the Fms-related tyrosine kinase 3 (FLT3) gene (FLT3-ITD) are associated with poor prognosis in patients with acute myeloid leukemia (AML). Due to the development of drug resistance, few FLT3-ITD inhibitors are effective against FLT3-ITD+ AML. In this study, we show that FLT3-ITD activates a novel pathway involving p21(Cdkn1a) (p21) and pre-B cell leukemia transcription factor 1 (Pbx1) that attenuates FLT3-ITD cell proliferation and is involved in the development of drug resistance. FLT3-ITD up-regulated p21 expression in both mouse bone marrow c-kit(+)-Sca-1(+)-Lin(-)( KSL) cells and Ba/F3 cells. The loss of p21 expression enhanced growth factor-independent proliferation and sensitivity to cytarabine as a consequence of concomitantly enriching the S+G(2)/M phase population and significantly increasing the expression of Pbx1, but not Evi-1, in FLT3-ITD+ cells. This enhanced cell proliferation following the loss of p21 was partially abrogated when Pbx1 expression was silenced in FLT3-ITD+ primary bone marrow colony-forming cells and Ba/F3 cells. When FLT3-ITD was antagonized with AC220, a selective inhibitor of FLT3-ITD, p21 expression was decreased coincident with Pbx1 mRNA up-regulation and a rapid decline in the number of viable FLT3-ITD+Ba/F3 cells; however, the cells eventually became refractory to AC220. Overexpressing p21 in FLT3-ITD+Ba/F3 cells delayed the emergence of cells that were refractory to AC220, whereas p21 silencing accelerated their development. These data indicate that FLT3-ITD is capable of inhibiting FLT3-ITD+ cell proliferation through the p21/Pbx1 axis and that treatments that antagonize FLT3-ITD contribute to the subsequent development of cells that are refractory to a FLT3-ITD inhibitor by disrupting p21 expression.