Nearly 60% of acute myeloid leukemia (AML) patients with the t(8;21)(q22;q22) translocation fail to achieve long-term disease-free survival. Our previous studies demonstrated that oridonin selectively induces apoptosis of t(8;21) leukemia cells and causes cleavage of AML1-ETO oncoprotein resulting from t(8;21), but the underlying mechanisms remain unclear. We show that oridonin interacted with glutathione and thioredoxin/thioredoxin reductase to increase intracellular reactive oxygen species, which in turn activated caspase-3 in t(8;21) cells. Moreover, oridonin bound AML1-ETO, directing the enzymatic cleavage at aspartic acid 188 via caspase-3 to generate a truncated AML1-ETO (ΔAML1-ETO) and preventing the protein from further proteolysis. ΔAML1-ETO interacted with AML1-ETO and interfered with the trans-regulatory functions of remaining AML1-ETO oncoprotein, thus acting as a tumor suppressor that mediates the anti-leukemia effect of oridonin. Furthermore, oridonin inhibited the activity of c-Kit+ leukemia-initiating cells. Therefore, oridonin is a potential lead compound for molecular target–based therapy of leukemia.