Traditionally, GRP78 is regarded as protective against hypoxia and nutrient starvation prevalent in the microenvironment of solid tumors; thus, its role in the development of hematologic malignancies remains to be determined. To directly elucidate the requirement of GRP78 in leukemogenesis, we created a biallelic conditional knockout mouse model of GRP78 and PTEN in the hematopoietic system. Strikingly, heterozygous knockdown of GRP78 in PTEN null mice is sufficient to restore the hematopoietic stem cell population back to the normal percentage and suppress leukemic blast cell expansion. AKT/mTOR activation in PTEN null BM cells is potently inhibited by Grp78 heterozygosity, corresponding with suppression of the PI3K/AKT pathway by GRP78 knockdown in leukemia cell lines. This is the first demonstration that GRP78 is a critical effector of leukemia progression, at least in part through regulation of oncogenic PI3K/AKT signaling. In agreement with PI3K/AKT as an effector for cytosine arabinoside resistance in acute myeloid leukemia, overexpression of GRP78 renders human leukemic cells more resistant to cytosine arabinoside-induced apoptosis, whereas knockdown of GRP78 sensitizes them. These, coupled with the emerging association of elevated GRP78 expression in leukemic blasts of adult patients and early relapse in childhood leukemia, suggest that GRP78 is a novel therapeutic target for leukemia.