Growing evidence indicates that aberrant DNA hypermethylation is associated with leukemogenesis, chemotherapy resistance, and relapse. DNA methyltransferase inhibitors such as azacitidine and decitabine have been shown to reverse drug resistance and prime leukemia cells to cytotoxic agents in vitro. Here we report the first pediatric phase 1 study using azacitidine in sequence with chemotherapy in patients with relapsed/refractory leukemia. Fourteen patients were enrolled, twelve with acute myeloid leukemia (AML) and two with acute lymphoblastic leukemia (ALL). All patients received azacitidine 75mg/m2/day subcutaneously for 5 days, followed by fludarabine 30mg/m2/day and cytarabine 2gm/m2/day intravenously for 5 days. The median number of prior regimens was 2 (range 1-5). Toxicities were typical of intensive chemotherapy. Febrile neutropenia and infection were the most common non-hematologic toxicities. No patients experienced dose-limiting toxicity. Seven of twelve AML patients achieved complete response after the first cycle. Illumina HumanMethylation450 BeadChip arrays identified a single region at gene body of farnesyldiphosphate farnesyl-transferase 1 gene (FDFT1) that showed methylome-wide significant differential methylation between patients who achieved response and those who did not (p = 0.002). The prognostic significance of this region was further analyzed in a separate data set from a phase II study of decitabine with combination chemotherapy in children with de novo AML. Our study indicates azacitidine plus fludarabine and cytarabine is well tolerated and active in children with relapsed leukemia and warrants further testing. The prognostic significance of the methylation biomarker merits further evaluation. This study was registered at http://www.clinicaltrials.gov (NCT01861002).