Mutation in nucleophosmin (NPM1) causes relocalization of this normally nucleolar protein to the cytoplasm (NPM1c+). Despite NPM1 mutation being the most common driver mutation in cytogenetically normal adult acute myeloid leukemia (AML), the mechanisms of NPM1c+-induced leukemogenesis remain unclear. Caspase-2 is a proapoptotic protein activated by NPM1 in the nucleolus. Here, we show that caspase-2 is also activated by NPM1c+ in the cytoplasm and DNA damage-induced apoptosis is caspase-2 dependent in NPM1c+ but not in NPM1wt AML cells. Strikingly, in NPM1c+ cells, caspase-2 loss results in profound cell cycle arrest, differentiation, and down-regulation of stem cell pathways that regulate pluripotency including impairment of the AKT/mTORC1 pathways, and inhibition of Rictor cleavage. In contrast, there were minimal differences in proliferation, differentiation, or the transcriptional profile of NPM1wt cells lacking caspase-2. Our results show that caspase-2 is essential for proliferation and self-renewal of AML cells expressing mutated NPM1. This study demonstrates that caspase-2 is a major effector of NPM1c+ function.