PHLPP2, a member of the PH-domain leucine-rich repeat protein phosphatase (PHLPP) family, which targets oncogenic kinases, has been actively investigated as a tumor suppressor in solid tumors. Little is known, however, regarding its regulation in hematological malignancies. We observed that PHLPP2 protein expression, but not its mRNA, was suppressed in late differentiation stage acute myeloid leukemia (AML) subtypes. MicroRNAs (miR or miRNAs) from the miR-17-92 cluster, oncomir-1, were shown to inhibit PHLPP2 expression and these miRNAs were highly expressed in AML cells that lacked PHLPP2 protein. Studies showed that miR-17-92 cluster regulation was, surprisingly, independent of transcription factors c-MYC and E2F in these cells; instead all-trans-retinoic acid (ATRA), a drug used for terminally differentiating AML subtypes, markedly suppressed miR-17-92 expression and increased PHLPP2 protein levels and phosphatase activity. Finally, we demonstrate that the effect of ATRA on miR-17-92 expression is mediated through its target, transcription factor C/EBPβ, which interacts with the intronic promoter of the miR-17-92 gene to inhibit transactivation of the cluster. These studies reveal a novel mechanism for upregulation of the phosphatase activity of PHLPP2 through C/EBPβ-mediated repression of the miR-17-92 cluster in terminally differentiating myeloid cells.