OUTLINE: This is a multicenter study. Remission induction: Patients receive daunorubicin IV over 15 minutes on days 1-3, cytarabine IV continuously on days 1-7, oral thioguanine daily on days 1-7, and cytarabine intrathecally (IT) on day 1. Cytarabine IV over 3 hours is administered every 12 hours on days 10-12. Filgrastim (G-CSF) is administered IV or subcutaneously (SQ) beginning on day 13 and continuing until blood counts recover. On approximately day 28, patients undergo a bone marrow aspirate and biopsy to assess response. Patients who have attained an M1 or M2a status proceed to consolidation or, if a 5/5 or 6/6 HLA matched sibling donor is available, proceed to allogeneic bone marrow transplantation. Patients with greater than 25% blasts go off study. Consolidation 1: Patients receive daunorubicin IV over 15 minutes on days 1 and 2, cytarabine IV over 3 hours every 12 hours on days 1, 2, 8, and 9, and asparaginase on days 2 and 9. G-CSF IV or SQ begins on day 10 and continues until blood counts recover. Consolidation 2: Patients receive cytarabine IV over 3 hours every 12 hours on days 1, 3, and 5. G-CSF IV or SQ begins on day 6 and continues until blood counts recover. Peripheral blood stem cells (PBSC) are collected after the second course of consolidation. Consolidation 3: Treatment is repeated as in consolidation 1. Patients who remain in morphologic remission after consolidation 3 proceed with therapy. Patients receive melphalan IV over 30 minutes on day -2, then PBSC are reinfused on day 0. G-CSF IV or SQ begins on day 1 and continues until blood counts recover. Patients are followed every 6 months for 4 years and then annually thereafter.