To better understand how the apoptosis repressor with caspase recruitment domain (ARC) protein confers drug resistance in acute myeloid leukemia (AML), we investigated the role of ARC in regulating leukemia-mesenchymal stromal cell (MSC) interactions. In addition to the previously reported effect on AML apoptosis, we have demonstrated that ARC enhances migration and adhesion of leukemia cells to MSCs both in vitro and in a novel human extramedullary bone/bone marrow mouse model. Mechanistic studies revealed that ARC induces IL1β expression in AML cells and increases CCL2, CCL4, and CXCL12 expression in MSCs, both through ARC-mediated activation of NFκB. Expression of these chemokines in MSCs increased by AML cells in an ARC/IL1β-dependent manner; likewise, IL1β expression was elevated when leukemia cells were co-cultured with MSCs. Further, cells from AML patients expressed the receptors for and migrated toward CCL2, CCL4, and CXCL12. Inhibition of IL1β suppressed AML cell migration and sensitized the cells co-cultured with MSCs to chemotherapy. Our results suggest the existence of a complex ARC-regulated circuit that maintains intimate connection of AML with the tumor microenvironment through NFκB/IL1β-regulated chemokine receptor/ligand axes and reciprocal crosstalk resulting in cytoprotection. The data implicate ARC as a promising drug target to potentially sensitize AML cells to chemotherapy.