Epigenetic modifying enzymes such as HDACs, p300 and PRMT1 are recruited by AML1/ETO, the pathogenic protein for t(8;21) AML, providing a strong molecular rationale for targeting these enzymes to treat this disease. While early phase clinical assessment indicated that treatment with HDAC inhibitors (HDACis) may be effective in t(8;21) AML patients, rigorous pre-clinical studies to identify the molecular and biological events that may determine therapeutic responses have not been performed. Using an AML mouse model driven by expression of AML1/ETO9a we demonstrated that treatment of mice bearing t(8;21) AML with the HDACi panobinostat caused a robust anti-leukemic response, that did not require functional p53 nor activation of conventional apoptotic pathways. Panobinostat triggered terminal myeloid differentiation via proteasomal degradation of AML1/ETO9a. Importantly, conditional AML1/ETO9a deletion phenocopied the effects of panobinostat and other HDACi, indicating that destabilization of AML1/ETO9a is critical for the anti-leukemic activity of these agents.