OUTLINE: This is a partially randomized, multicenter study. Patients are stratified by center. Patients receive one course of the VPLD regimen comprised of vincristine IV and daunorubicin IV over 15 minutes to 2 hours on days 0 and 7, oral prednisone daily on days 0-7, intrathecal cytarabine on day 0, and asparaginase or pegaspargase intramuscularly on days 3, 5, and 7. Patients are assigned to 1 of 2 two postinduction chemotherapy groups based on bone marrow response on day 7 of induction. Patients with M1/M2 marrow on day 7 are considered rapid early responders. Patients with M3 marrow on day 7 are considered slow early responders. Group 1: Rapid early responders Patients receive 2 additional courses of VPLD induction chemotherapy. Patients are then randomized to 1 of 4 treatment arms: Arm I: Beginning on day 35 of induction therapy, patients receive standard Berlin-Frankfurt-Munster (BFM) regimen with standard delayed intensification. Standard BFM for patients in arm I consists of the following: consolidation over 5 weeks with cyclophosphamide, cytarabine, and mercaptopurine; interim maintenance over 8 weeks with oral methotrexate and mercaptopurine (MTX/MP); and delayed intensification over 7 weeks consisting of reinduction with vincristine, doxorubicin, oral dexamethasone, and asparaginase or pegaspargase followed by reconsolidation with cyclophosphamide, thioguanine, and cytarabine. Arm II: Patients receive standard BFM regimen with double delayed intensification. Patients receive therapy similar to those in arm I, but dexamethasone is interrupted for 1 week during delayed intensification and the intensification regimen is repeated, separated by an 8 week interim maintenance course of oral MTX/MP. Arm III: Patients receive augmented BFM regimen with standard delayed intensification. Patients receive 9 weeks of consolidation therapy with 2 courses of vincristine and pegaspargase alternating with the arm I consolidation therapy. Vincristine, intravenous methotrexate, and pegaspargase (the Capizzi I regimen) are substituted for oral MTX/MP in the interim maintenance regimen. Pegaspargase is substituted for asparaginase and two additional doses of vincristine are administered during delayed intensification. Arm IV: Patients receive augmented BFM regimen with double delayed intensification. Patients receive intensified chemotherapy throughout, combining the additional therapy given to patients in arms II and III. Patients receiving augmented BFM regimen receive pegaspargase instead of asparaginase. Patients with CNS disease at diagnosis are treated only on arm IV. Patients who are Philadelphia chromosome positive and do not have a bone marrow donor are nonrandomly assigned to the treatment group for slow early responders. All RER patients receive the same maintenance therapy with vincristine/prednisone and oral MTX/MP. Intrathecal methotrexate is administered periodically throughout protocol treatment. Group 2: Slow early responders Patients receive augmented BFM consolidation therapy and Capizzi I interim maintenance identical to that received by rapid early responders in arm IV. Patients are then randomized to receive double delayed intensification with either idarubicin or doxorubicin and concurrent cyclophosphamide. All patients receive the same maintenance therapy with vincristine/prednisone and oral MTX/MP. Intrathecal MTX is administered periodically throughout protocol treatment. Patients with CNS disease at entry receive craniospinal irradiation daily for 5 consecutive days beginning on day 0 of consolidation therapy. All slow early responders at diagnosis receive cranial irradiation daily for 5 consecutive days during consolidation therapy. Patients with testicular leukemia at diagnosis receive bilateral testicular irradiation daily for 5 consecutive days during consolidation chemotherapy. Groups 1 and 2: Maintenance therapy continues for 2 years for girls or 3 years for boys beyond completion of consolidation therapy. Patients are followed every 4-6 weeks for 1 year, every 3 months for 1 year, every 6 months for 2 years, and then annually thereafter.