TWIST2 has a dual function in tumors. Its implication in the initiation and metastasis of various solid tumors is well established, and its tumor-suppressor role in murine osteosarcoma cells has been reported recently. However, the function of TWIST2 and its underlying mechanisms in human normal and malignant hematopoiesis remain unclear. In the present study, we found that TWIST2 directly regulated p21 in human hematopoietic cells and whose silence promoted cell proliferation and cell cycle progression. Hypermethylation of TWIST2 occurred to 23 out of the 75 adult acute myeloid leukemia (AML) patients and resulted in the impaired expression of both TWIST2 and p21. Conversely, TWIST2 overexpression inhibited the growth of AML cells partially through its direct activation of p21 with intact HLH (helix-loop-helix) domain. The microarray data and gene expression validation showed that TWIST2 was sufficient to activate known tumor-suppressor genes, whereas suppress known oncogenes, which further supported its inhibitory effect against AML cells. Taken together, our data have identified a novel TWIST2-p21 axis that modulates the cell cycle of both normal and leukemic cells and demonstrated that the direct regulation of p21 by TWIST2 has a role in its tumor-suppressor function in AML.