Although cure rates for acute lymphoblastic leukemia (ALL) have increased, development of resistance to drugs and patient relapse are common. The environment in which the leukemia cells are present during the drug treatment is known to provide significant survival benefit. Here, we have modeled this process by culturing murine Bcr/Abl-positive acute lymphoblastic leukemia cells in the presence of stroma while treating them with a moderate dose of two unrelated drugs, the farnesyltransferase inhibitor lonafarnib and the tyrosine kinase inhibitor nilotinib. This results in an initial large reduction in cell viability of the culture and inhibition of cell proliferation. However, after a number of days, cell death ceases and the culture becomes drug-tolerant, enabling cell division to resume. Using gene expression profiling, we found that the development of drug resistance was accompanied by massive transcriptional upregulation of genes that are associated with general inflammatory responses such as the metalloproteinase MMP9. MMP9 protein levels and enzymatic activity were also increased in ALL cells that had become nilotinib-tolerant. Activation of p38, Akt and Erk correlated with the development of environment-mediated drug resistance (EMDR), and inhibitors of Akt and Erk in combination with nilotinib reduced the ability of the cells to develop resistance. However, inhibition of p38 promoted increased resistance to nilotinib. We conclude that development of EMDR by ALL cells involves changes in numerous intracellular pathways. Development of tolerance to drugs such as nilotinib may therefore be circumvented by simultaneous treatment with other drugs having divergent targets.