Arsenic trioxide (ATO) mediates PML-RARA (promyelocytic leukemia-retinoic acid receptor-α) oncoprotein degradation via the proteasome pathway and this degradation appears to be critical for achieving cure in acute promyeloytic leukemia (APL). We have previously demonstrated significant micro-environment-mediated drug resistance (EMDR) to ATO in APL. Here we demonstrate that this EMDR could be effectively overcome by combining a proteasome inhibitor (bortezomib) with ATO. A synergistic effect on combining these two agents in vitro was noted in both ATO-sensitive and ATO-resistant APL cell lines. The mechanism of this synergy involved downregulation of the nuclear factor-κB pathway, increase in unfolded protein response (UPR) and an increase in reactive oxygen species generation in the malignant cell. We also noted that PML-RARA oncoprotein is effectively cleared with this combination in spite of proteasome inhibition by bortezomib, and that this clearance is mediated through a p62-dependent autophagy pathway. We further demonstrated that proteasome inhibition along with ATO had an additive effect in inducing autophagy. The beneficial effect of this combination was further validated in an animal model and in an on-going clinical trial. This study raises the potential of a non-myelotoxic proteasome inhibitor replacing anthracyclines in the management of high-risk and relapsed APL.