Aberrant DNA methylation mediated by deregulation of DNA methyltransferases (DNMT) is a key hallmark of acute myeloid leukemia (AML), yet efforts to target DNMT deregulation for drug development have lagged. We previously demonstrated that upregulation of fatty acid-binding protein 4 (FABP4) promotes AML aggressiveness through enhanced DNMT1-dependent DNA methylation. Here, we demonstrate that FABP4 upregulation in AML cells occurs through vascular endothelial growth factor (VEGF) signaling, thus elucidating a crucial FABP4-DNMT1 regulatory feedback loop in AML biology. We show that FABP4 dysfunction by its selective inhibitor BMS309403 leads to downregulation of DNMT1, decrease of global DNA methylation and re-expression of p15INK4B tumor suppressor gene by promoter DNA hypomethylation in vitro, ex vivo and in vivo. Functionally, BMS309403 suppresses cell colony formation, induces cell differentiation, and, importantly, impairs leukemic disease progression in mouse models of leukemia. Our findings highlight AML-promoting properties of the FABP4-DNMT1 vicious loop, and identify an attractive class of therapeutic agents with a high potential for clinical use in AML patients. The results will also assist in establishing the FABP4-DNMT1 loop as a target for therapeutic discovery to enhance the index of current epigenetic therapies.