Disrupting the protective signals provided by the bone marrow microenvironment will be critical for more effective combination drug therapies for acute myeloid leukemia (AML). Cells of the osteoblast lineage that reside in the endosteal niche have been implicated in promoting survival of AML cells. Here, we investigated how to prevent this protective interaction. We previously showed that SDF-1, a chemokine abundant in the bone marrow, induces apoptosis of AML cells, unless the leukemic cells receive protective signals provided by differentiating osteoblasts (8, 10). We now identify a novel signaling pathway in differentiating osteoblasts that can be manipulated to disrupt the osteoblast-mediated protection of AML cells. Treating differentiating osteoblasts with histone deacetylase inhibitors (HDACi) abrogated their ability to protect co-cultured AML cells from SDF-1-induced apoptosis. HDACi prominently up-regulated expression of the Nherf1 scaffold protein, which played a major role in preventing osteoblast-mediated protection of AML cells. Protein phosphatase-1α (PP1α) was identified as a novel Nherf1 interacting protein that acts as the downstream mediator of this response by promoting nuclear localization of the TAZ transcriptional modulator. Moreover, independent activation of either PP1α or TAZ was sufficient to prevent osteoblast-mediated protection of AML cells even in the absence of HDACi. Together, these results indicate that HDACi target the AML microenvironment by enhancing activation of the Nherf1-PP1α-TAZ pathway in osteoblasts. Selective drug targeting of this osteoblast signaling pathway may improve treatments of AML by rendering leukemic cells in the bone marrow more susceptible to apoptosis.