Early response to induction chemotherapy is a predictor of outcome in acute myeloid leukemia (AML). We determined the prevalence and significance of postinduction residual disease (RD) by multidimensional flow cytometry (MDF) in children treated on Children's Oncology Group AML protocol AAML03P1. Postinduction marrow specimens at the end of induction (EOI) 1 or 2 or at the end of therapy from 249 patients were prospectively evaluated by MDF for RD, and presence of RD was correlated with disease characteristics and clinical outcome. Of the 188 patients in morphologic complete remission at EOI1, 46 (24%) had MDF-detectable disease. Those with and without RD at the EOI1 had a 3-year relapse risk of 60% and 29%, respectively (P < .001); the corresponding relapse-free survival was 30% and 65% (P < .001). Presence of RD at the EOI2 and end of therapy was similarly predictive of poor outcome. RD was detected in 28% of standard-risk patients in complete remission and was highly associated with poor relapse-free survival (P = .008). In a multivariate analysis, including cytogenetic and molecular risk factors, RD was an independent predictor of relapse (P < .001). MDF identifies patients at risk of relapse and poor outcome and can be incorporated into clinical trials for risk-based therapy allocation. This study was registered at www.clinicaltrials.gov as NCT00070174.