RATIONALE: Drugs used in chemotherapy, such as cyclosporine, daunorubicin, and cytarabine, use different ways to stop cancer cells from dividing so they stop growing or die. Combining more than one drug may kill more cancer cells. PURPOSE: This phase II trial is studying how well giving cyclosporine together with daunorubicin and cytarabine works in treating older patients with untreated acute myeloid leukemia.

OBJECTIVES: * Determine the safety and efficacy of cyclosporine, daunorubicin, and cytarabine in older patients with previously untreated acute myeloid leukemia. * Determine the frequency and severity of toxic effects of this regimen in these patients. * Determine, preliminarily, the frequency and prognostic significance of functional and phenotypic P-glycoprotein expression and cytogenetics in patients treated with this regimen. * Determine, preliminarily, the pharmacokinetic characteristics of this regimen in these patients. OUTLINE: This is a multicenter study. * Induction therapy: Patients receive cyclosporine IV and daunorubicin IV continuously on days 1-3 and cytarabine IV continuously on days 1-7. Patients who achieve complete response (CR) after chemotherapy receive filgrastim (G-CSF) or sargramostim (GM-CSF) IV or subcutaneously beginning on day 15 or 20 and continuing until blood counts recover. Patients who maintain CR after 2 courses of induction therapy proceed to consolidation therapy. * Consolidation therapy: Patients receive treatment as in induction therapy with cyclosporine and daunorubicin on days 1-2 and cytarabine on days 1-5. Patients achieving CR receive an additional course of chemotherapy beginning at least 14 days after completion of the first course of cytarabine. Patients are followed every 3 months for 1 year, every 6 months for 1 year, and then annually for 3 years. PROJECTED ACCRUAL: A total of 25-64 patients will be accrued for this study within 13 months.