Cell proliferation and differentiation are highly coordinated processes. These two processes are disrupted during leukemogenesis, resulting in differentiation block and uncontrolled proliferation in leukemia. To understand the mechanisms disrupting the coordination between the two processes in acute promyelocytic leukemia (APL), we investigated the regulatory mechanism of the negative cell cycle regulator CDKN2D by the promyelocytic leukemia/retinoic acid receptor α (PML/RARα) fusion protein and the role of CDKN2D in cell differentiation and proliferation. We found that CDKN2D expression in APL cells was significantly lower than that in normal promyelocytes. By chromatin immunoprecipitation and luciferase reporter assays, we showed that PML/RARα directly bound to and inhibited the transactivation of the CDKN2D promoter. Further evidence by the truncated and mutated CDKN2D promoters revealed that the everted repeat 8 (ER8) motif on the promoter was the binding site of PML/RARα. Forced expression of CDKN2D induced G0/G1 phase arrest and partial granulocytic differentiation in APL-derived NB4 cells, suggesting the function of CDKN2D in regulating both cell proliferation and granulocytic differentiation. Furthermore, all-trans retinoic acid (ATRA) significantly induced CDKN2D expression in APL cells and knockdown of CDKN2D expression during ATRA treatment partially blocked the ATRA-induced differentiation and cell cycle arrest. Collectively, our data indicate that CDKN2D repression by PML/RARα disrupts both cell proliferation and differentiation in the pathogenesis of APL, and induced expression of CDKN2D by ATRA alleviates the disruption of both processes to ensure treatment efficiency. This study provides a mechanism for coupling proliferation and differentiation in leukemic cells through the action of CDKN2D.