Abstract Dysregulated cellular differentiation is a hallmark of acute leukemogenesis. Phosphatases are widely suppressed in cancers but have not been traditionally associated with differentiation. In this study, we found that the silencing of protein phosphatase 2A (PP2A) directly blocks differentiation in acute myeloid leukemia (AML). Gene expression and mass cytometric profiling revealed that PP2A activation modulates cell cycle and transcriptional regulators that program terminal myeloid differentiation. Using a novel pharmacological agent, OSU-2S, in parallel with genetic approaches, we discovered that PP2A enforced c-Myc and p21 dependent terminal differentiation, proliferation arrest, and apoptosis in AML. Finally, we demonstrated that PP2A activation decreased leukemia-initiating stem cells, increased leukemic blast maturation, and improved overall survival in murine Tet2−/−Flt3ITD/WT and human cell-line derived xenograft AML models in vivo. Our findings identify the PP2A/c-Myc/p21 axis as a critical regulator of the differentiation/proliferation switch in AML that can be therapeutically targeted in malignancies with dysregulated maturation fate.