We studied leukemic stem cells (LSCs) in a Smad4(-/-) mouse model of acute myelogenous leukemia (AML) induced either by the HOXA9 gene or by the fusion oncogene NUP98-HOXA9. Although Hoxa9-Smad4 complexes accumulate in the cytoplasm of normal hematopoietic stem cells and progenitor cells (HSPCs) transduced with these oncogenes, there is no cytoplasmic stabilization of HOXA9 in Smad4(-/-) HSPCs, and as a consequence increased levels of Hoxa9 is observed in the nucleus leading to increased immortalization in vitro. Loss of Smad4 accelerates the development of leukemia in vivo because of an increase in transformation of HSPCs. Therefore, the cytoplasmic binding of Hoxa9 by Smad4 is a mechanism to protect Hoxa9-induced transformation of normal HSPCs. Because Smad4 is a potent tumor suppressor involved in growth control, we developed a strategy to modify the subcellular distribution of Smad4. We successfully disrupted the interaction between Hoxa9 and Smad4 to activate the TGF-β pathway and apoptosis, leading to a loss of LSCs. Together, these findings reveal a major role for Smad4 in the negative regulation of leukemia initiation and maintenance induced by HOXA9/NUP98-HOXA9 and provide strong evidence that antagonizing Smad4 stabilization by these oncoproteins might be a promising novel therapeutic approach in leukemia.