OUTLINE: Patients are stratified according to age (15 to 29 vs 30 to 49 vs 50 to 65), performance status (0-1 vs 2-3), participating center, and candidate for allogeneic bone marrow transplantation (yes vs no). Patients receive induction chemotherapy consisting of daunorubicin IV on days 1-3, vincristine IV on days 1, 8, 15, and 22, oral prednisone on days 1-28, and asparaginase IV or intramuscularly (IM) on days 15-24. Patients with persistent leukemia on day 21, receive additional induction therapy consisting of daunorubicin IV on days 22 and 23, vincristine IV on days 29 and 36, and oral prednisone continuing to day 42. Patients with CNS leukemia receive additional therapy beginning on day 1 of induction chemotherapy consisting of methotrexate intrathecally (IT) or intraventricularly twice weekly until blasts are absent in spinal fluid. Patients receive oral leucovorin calcium every 6 hours for a total of 4 doses following each IT dose in the absence of blood count recovery. Following absence of spinal fluid blasts, patients receive methotrexate IT or intraventricularly weekly for 4 weeks then monthly for 1 year. Patients also receive cranial radiotherapy during consolidation therapy 5 days a week for 2.5 weeks. Patients with A1 bone marrow receive consolidation therapy following completion of induction therapy and blood count recovery. Patients receive consolidation therapy consisting of cyclophosphamide IV on days 1, 15, and 29, cytarabine IV on days 2-5, 9-12, 16-19, and 23-26, oral mercaptopurine on days 1-28, and methotrexate IT on days 2, 9, 16, and 23. Following completion of consolidation therapy, patients eligible for allogeneic bone marrow transplantation receive total body radiotherapy 3 times a day on days -7, -6, -5, and twice on day -4, and eptoposide IV over 4 hours on day -3. Patients undergo allogeneic bone marrow transplantation on day 0. Following completion of consolidation therapy, patients ineligible for allogeneic bone marrow transplantation receive maintenance therapy consisting of oral mercaptopurine on days 1-63, and oral methotrexate on days 1, 8, 15, 22, 29, 36, 43, 50, and 57. Patients receive subsequent courses of maintenance therapy when blood counts recover. Patients receive a second course of maintenance therapy consisting of vincristine IV on days 1, 8, 15, and 22, doxorubicin IV on days 1, 8, 15, and 22, and oral dexamethasone on days 1-28. Patients receive a third course consisting of cyclophosphamide IV on day 1, oral thioguanine on days 1-14, and cytarabine IV on days 3-6 and 10-13. Patients receive a fourth course consisting of oral mercaptopurine and oral methotrexate daily for 2 years. Patients are followed monthly for 6 months and then every 2 months thereafter.