Purpose: The persistence of leukemia stem cells (LSC)-containing cells after induction therapy may contribute to minimal residual disease (MRD) and relapse in acute myeloid leukemia (AML). We investigated the clinical relevance of CD34þCD123þ LSC-containing cells and antileukemia potency of a novel antibody conjugate SL-101 in targeting CD123þ LSCs. Experimental Methods and Results: In a retrospective study on 86 newly diagnosed AML patients, we demonstrated that a higher proportion of CD34þCD123þ LSC-containing cells in remission was associated with persistent MRD and predicted shorter relapse-free survival in patients with poor-risk cytogenetics. Using flow cytometry, we explored the potential benefit of therapeutic targeting of CD34þCD38CD123þ cells by SL-101, a novel antibody conjugate comprising an anti-CD123 single-chain Fv fused to Pseudomonas exotoxin A. The antileukemia potency of SL-101 was determined by the expression levels of CD123 antigen in a panel of AML cell lines. Colony-forming assay established that SL-101 strongly and selectively suppressed the function of leukemic progenitors while sparing normal counterparts. The internalization, protein synthesis inhibition, and flow cytometry assays revealed the mechanisms underlying the cytotoxic activities of SL-101 involved rapid and efficient internalization of antibody, sustained inhibition of protein synthesis, induction of apoptosis, and blockade of IL3-induced p-STAT5 and p-AKT signaling pathways. In a patient-derived xenograft model using NSG mice, the repopulating capacity of LSCs pretreated with SL-101 in vitro was significantly impaired. Conclusions: Our data define the mechanisms by which SL-101 targets AML and warrant further investigation of the clinical application of SL-101 and other CD123-targeting strategies in AML.