Most patients with acute myeloid leukemia (AML) die from complications arising from cytopenias resulting from bone marrow (BM) failure. The common presumption among physicians is that AML-induced BM failure is primarily due to overcrowding, yet BM failure is observed even with low burden of disease. Here, we use large clinical datasets to show the lack of correlation between BM blast burden and degree of cytopenias at the time of diagnosis. We develop a splenectomized xenograft model to demonstrate that transplantation of human primary AML into immunocompromised mice recapitulates the human disease course by induction of BM failure via depletion of mouse hematopoietic stem and progenitor populations. Using unbiased approaches, we show that AML-elaborated IL-6 acts to block erythroid differentiation at the proerythroblast stage and that blocking antibodies against human IL-6 can improve AML-induced anemia and prolong overall survival, suggesting a potential therapeutic approach.