OBJECTIVES: I. Compare the time to treatment failure and overall survival in patients with newly diagnosed, previously untreated, Philadelphia chromosome positive, chronic phase chronic myelogenous leukemia treated with STI571 vs interferon alfa combined with cytarabine. II. Compare the quality of life and disease and treatment related toxicities in patients treated with these 2 regimens. III. Compare the rate and duration of complete hematologic response (CHR) and major cytogenetic response (MCR) in patients treated with these 2 regimens. IV. Compare the rate and duration of MCR and CHR attributable to crossover therapy in patients who crossover to receive STI571 OR interferon alfa combined with cytarabine. V. Compare the tolerability and safety of these regimens in these patients. VI. Determine the population pharmacokinetics of STI571 in these patients.