Acute promyelocytic leukemia (APL), characterized by a translocation between the promyelocytic leukemia gene (PML) on chromosome 15 and the retinoic acid receptor-α (RARα) gene on chromosome 17, has become a model for targeted treatment of cancer. Advances in our understanding of the fundamental biology of this disease have led to the development of tools for diagnosis, monitoring of minimal residual disease, and detection of early relapse. Differentiation therapy with all-trans retinoic acid in combination with chemotherapy has significantly improved survival in patients with APL. Moreover, arsenic trioxide, which induces differentiation and apoptosis of APL cells, has become standard treatment for relapsed disease, and its role in the treatment of newly diagnosed APL is under active investigation. The lessons learned from APL have broad applications to other forms of leukemia and to cancer in general, whereby molecularly targeted therapy is directed to specifically defined subgroups.