Retinoic acid and arsenic trioxide target the protein stability and transcriptional repression activity of the fusion oncoprotein PML-RARA, resulting in regression of acute promyelocytic leukemia (APL). Phenotypically, retinoic acid induces differentiation of APL cells. Here we show that retinoic acid also triggers growth arrest of leukemia-initiating cells (LICs) ex vivo and their clearance in PML-RARA mouse APL in vivo. Retinoic acid treatment of mouse APLs expressing the fusion protein PLZF-RARA triggers full differentiation, but not LIC loss or disease remission, establishing that differentiation and LIC loss can be uncoupled. Although retinoic acid and arsenic synergize to clear LICs through cooperative PML-RARA degradation, this combination does not enhance differentiation. A cyclic AMP (cAMP)-dependent phosphorylation site in PML-RARA is crucial for retinoic acid-induced PML-RARA degradation and LIC clearance. Moreover, activation of cAMP signaling enhances LIC loss by retinoic acid, identifying cAMP as another potential APL therapy. Thus, whereas transcriptional activation of PML-RARA is likely to control differentiation, its catabolism triggers LIC eradication and long-term remission of mouse APL. Therapy-triggered degradation of oncoproteins could be a general strategy to eradicate cancer stem cells.