The apoptosis repressor with caspase recruitment domain (ARC) protein is known to suppress both intrinsic and extrinsic apoptosis. We previously reported that ARC expression is a strong, independent adverse prognostic factor in acute myeloid leukemia (AML). Here, we investigated the regulation and role of ARC in AML. ARC expression is upregulated in AML cells co-cultured with bone marrow-derived mesenchymal stromal cells (MSCs) and suppressed by inhibition of MAPK and PI3K signaling. AML patient samples with RAS mutations (N = 64) expressed significantly higher levels of ARC than samples without RAS mutations (N = 371) (P = 0.016). ARC overexpression protected and ARC knockdown sensitized AML cells to cytarabine and to agents that selectively induce intrinsic (ABT-737) or extrinsic (TNF-related apoptosis inducing ligand) apoptosis. NOD-SCID mice harboring ARC-overexpressing KG-1 cells had significantly shorter survival than mice injected with control cells (median 84 vs 111 days) and significantly fewer leukemia cells were present when NOD/SCID IL2Rγ null mice were injected with ARC knockdown as compared to control Molm13 cells (P = 0.005 and 0.03 at 2 and 3 weeks, respectively). Together, these findings demonstrate that MSCs regulate ARC in AML through activation of MAPK and PI3K signaling pathways. ARC confers drug resistance and survival advantage to AML in vitro and in vivo, suggesting ARC as a novel target in AML therapy.