Hypoxia and interactions with bone marrow (BM) stromal cells have emerged as essential components of the leukemic BM microenvironment in promoting leukemia cell survival and chemoresistance. High levels of transforming growth factor beta 1 (TGFβ1) produced by BM stromal cells in the BM niche regulate cell proliferation, survival, and apoptosis, depending on the cellular context. Exogenous TGFβ1 induced accumulation of acute myeloid leukemia (AML) cells in a quiescent G0 state, which was further facilitated by the co-culture with BM-derived mesenchymal stem cells (MSCs). In turn, TGFβ-neutralizing antibody 1D11 abrogated rhTGFβ1 induced cell cycle arrest. Blocking TGFβ with 1D11 further enhanced cytarabine (Ara-C)-induced apoptosis of AML cells in hypoxic and in normoxic conditions. Additional constituents of BM niche, the stroma-secreted chemokine CXCL12 and its receptor CXCR4 play crucial roles in cell migration and stroma/leukemia cell interactions. Treatment with 1D11 combined with CXCR4 antagonist plerixafor and Ara-C decreased leukemia burden and prolonged survival in an in vivo leukemia model. These results indicate that blockade of TGFβ by 1D11 and abrogation of CXCL12/CXCR4 signaling may enhance the efficacy of chemotherapy against AML cells in the hypoxic BM microenvironment.