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Acute myeloid leukaemia (AML) is characterized by the accumulation of transformed immature myeloid blasts. While most AML patients treated with standard therapy have poor outcomes, in the APL disease subtype retinoic acid induces leukaemia maturation and can be curative in combination with arsenic trioxide. Recently approved mutant IDH1/2 inhibitors also induce AML maturation, renewing interest in AML differentiation therapy. To examine differentiation therapy dynamics in vivo we have generated a novel mouse AML model driven by reversible RNAi-mediated knockdown of the myeloid transcription factor PU.1. Restoration of endogenous PU.1 in established AML in vivo triggers synchronous differentiation of leukemic blasts and disease clearance. However, despite near-complete remission, mice reproducibly relapse with immature AML. Notably, in vivo time course studies reveal that one week after PU.1 restoration leukemic blasts differentiate into two mature myeloid lineages with distinct immunophenotype and morphology. AML-derived SSClowLy6G+ cells resembling neutrophils initially predominate but are rapidly eradicated in vivo. In contrast, high resolution flow and imaging indicates that mature AML-derived SSChighF4/80+SigF+ eosinophil-like cells persist at low numbers in specific organs during disease remission and appear to seed relapse. In mice transplanted with AML blasts lacking the essential eosinophil lineage transcription factor GATA1, in vivo PU.1 restoration triggers neutrophil but not eosinophil lineage differentiation and thereby eliminates residual disease. These results demonstrate that AML differentiation therapy can produce long-lived sublineages of mature AML-derived cells from which relapse can originate. Understanding the multilineage potential of AML blasts in individual patients may inform new strategies to improve differentiation therapy outcomes.