OUTLINE: This is a randomized, open label, crossover, multicenter study. Patients are randomized to one of two treatment arms: Arm I: Patients receive oral STI571 once daily. Arm II: Patients receive interferon alfa (IFN-A) subcutaneously (SQ) daily. Gradual intrapatient dose escalation is performed until the target dose of IFN-A is achieved. Patients then also receive cytarabine SQ daily for 10 days every month. Cytarabine is discontinued when a complete cytogenetic response is achieved and confirmed on two consecutive occasions not more than 3 months apart. Both arms: Courses repeat monthly in the absence of progression to accelerated phase or blast crisis, or unacceptable toxicity. Patients with no complete hematologic response at 6 months, no major cytogenetic response at year 2, or loss of complete hematologic response (without progression to accelerated or blastic phase) discontinue treatment on the arm to which they were originally randomized and begin treatment on the other arm. Crossover courses repeat monthly in the absence of progression to accelerated phase or blast crisis, or unacceptable toxicity. Quality of life is assessed prior to study; monthly for the first 6 months of study; at 9, 12, 18, and 24 months; at time of crossover (if applicable); and at treatment discontinuation before year 2 (if applicable). All patients are followed every 3 months for up to 8 years.