Inclusion Criteria:

* Patients must be ≥1 year and \< 22 years of age at the time of enrollment.
* Patient must have one of the following diagnoses:

* Treatment-related MDS/AML: Patients with solid organ or hematopoietic neoplasms previously treated with alkylating agents, ionizing radiation, topoisomerase inhibitors, antimetabolites, thiopurines, mycophenolate mofetil, fludarabine, and anti-tubulin agents (vincristine, vinblastine, vindesine, paclitaxel, and docetaxel usually in combination), who develop MDS, or AML are candidates for the CPXSMN protocol. If the bone marrow has between 5% and 20% blasts (higher-risk MDS), patients are discussed with the hematopoietic stem cell transplantation (HSCT) team for consideration to receive chemotherapy before HSCT. If the consensus is that cytoreduction before HSCT is necessary, and the cumulative dose of doxorubicin equivalent is \< 400 mg/m2, patients are eligible for the CPXSMN protocol. OR
* Secondary MDS/AML: Patients with primary MDS in transformation to AML (refractory cytopenia with an excess of blasts), acquired aplastic anemia evolving to AML, myeloid neoplasms arising from inherited bone marrow failure syndromes (including severe congenital neutropenia, Schwachman-Diamond syndrome, MECOM syndrome) or MDS/AML predisposition syndromes (including germline predisposition in GATA2, RUNX1, SAMD9/SAMD9L, ERCC6L2, NF1, ETV6, ANKRD26, ERCC6L2, TP53 or CEBPA genes). If the bone marrow has between 5% and 20% blasts (higher-risk MDS), patients are discussed with the HSCT team for consideration to receive chemotherapy before HSCT. If the consensus is that cytoreduction before HSCT is necessary, the patients are eligible for the CPXSMN protocol.
* Patients must have a performance status corresponding to an Eastern Cooperative Oncology Group (ECOG) score of 0, 1 or 2. Use Karnowski for patients \> 16 years of age and Lansky for patients ≤16 years of age.

* Note: Patients who are unable to walk because of paralysis, but who are up in a wheelchair, will be considered ambulatory for the purpose of assessing the performance score.
* Concomitant medications restrictions

* See Section 4.2.5 or Appendix II (of protocol) for concomitant therapy restrictions for patients during treatment.
* Adequate renal function defined as:

* Creatinine clearance or radioisotope GFR \> 70 mL/min/1.73 m\^2, or
* A serum creatinine based on age/gender as follows: Age: 1 to \< 2 years; Maximum Serum Creatinine: Male 0.6, Female 0.6; Age: 2 to \< 6 years, Maximum Serum Creatinine: Male 0.8, Female 0.8; Age: 6 to \< 10 years; Maximum Serum Creatinine: Male 1, Female 1; Age: 10 to \< 13 years; Maximum Serum Creatinine: Male 1.2, Female 1.2; Age: 13 to \< 16 years; Maximum Serum Creatinine: Male 1.5, Female 1.5; Age: \≥16 years; Maximum Serum Creatinine: Male 1.7, Female 1.4
* Adequate liver function defined as:

* Direct bilirubin ≤1.5 x upper limit of normal (ULN) for age and institution. At institutions that do not obtain a direct bilirubin in patients with a normal total bilirubin, a normal total bilirubin may be used as evidence that the direct bilirubin is not \> 1.5 x the ULN.

* SGPT (ALT) ≤ 3.0 x ULN for age and institution (unless it is related to leukemic involvement).
* Adequate cardiac function defined as:

* Shortening fraction of ≥27% by echocardiogram, or
* Ejection fraction of ≥ 50% by radionuclide angiogram or echocardiogram, and
* Corrected QT (QTcB) interval \< 500 msecs
* Central nervous system function defined as:

* Patients with seizure disorder may be enrolled if on anticonvulsants and if seizures are well controlled
* CNS toxicity ≤ Grade 2
* Prior therapy

* Patients must have recovered from the acute toxic effects of all prior chemotherapy, immunotherapy, HSCT or radiotherapy prior to entering this study. All prior treatment-related toxicities must have resolved to ≤ Grade 2 prior to enrollment.

1. Myelosuppressive chemotherapy: Must not have received myelosuppressive chemotherapy within 3 weeks of entry onto this study (excluding hydroxyurea). Cyto-reduction with hydroxyurea can be initiated and continued for up to 24 hours prior to the start of CPX-351.
2. Biologic (anti-neoplastic agent): At least 7 days since the completion of therapy with steroids, retinoids or hypomethylating agents. Note: For agents that have known adverse events occurring beyond 7 days after administration (i.e. monoclonal antibodies), this period must be extended beyond the time during which acute adverse events are known to occur.
3. Radiation therapy (RT): ≥ 2 weeks for local palliative RT (small port); ≥ 6 months must have elapsed if prior craniospinal RT or if ≥ 50% radiation of pelvis; ≥ 6 weeks must have elapsed if other substantial BM radiation. Note: Patients must have received ≤ than 13.6 Gy prior radiation to the mediastinum.
4. Hematopoietic stem cell transplantation: No evidence of active graft vs. host disease for at least 4 weeks. For allogeneic HSCT patients, ≥ 3 months must have elapsed since HSCT.

* Must have received no more than 1 prior autologous or allogeneic stem cell transplant.
* Patients must be off all systemic immunosuppressive therapy for at least 2 weeks, excluding hydrocortisone for physiologic cortisol replacement.
5. Intrathecal cytotoxic therapy:

* No waiting period is required for patients having received intrathecal cytarabine, methotrexate, and/or hydrocortisone.
* At least 14 days must have elapsed since receiving liposomal cytarabine (DepoCyte) by intrathecal injection.
6. Growth factors:

* Patients must not have received hematopoietic growth factors for 7 days prior to CPX-351.
* Patients must not have received pegfilgrastim for 14 days prior to CPX-351.
* HIV disease

* Patients with a known history of HIV are eligible, if they meet all of the following conditions:

* No history of HIV complications with the exception of CD4 count \< 200 cells/mm\^3
* No antiretroviral therapy with overlapping toxicity such as myelosuppression
* CD4 count \> 500 cells/mm3 prior to the diagnosis of relapsed AML
* HIV viral loads below the limit of detection
* No history of highly active antiretroviral therapy (HAART)-resistant HIV
* Residual or relapsed solid malignancy

Patients with residual or relapsed solid malignancy (for example osteosarcoma) at the time of the diagnosis of sMN are not excluded from this trial and the treatment individualized to integrate the management of the two malignancies.

* All patients and/or their parents or legal guardians must sign a written informed consent.

Exclusion Criteria:

* Patients with de novo AML (i.e., patients eligible for St. Jude or frontline AML trials).
* Patients with any of the following:

* Constitutional trisomy 21 or with constitutional mosaicism of chromosome trisomy 21
* Patients with Fanconi anemia (DNA repair syndrome) or dyskeratosis congenita (telomeropathy)
* Wilson disease or other copper-related metabolic disorders
* Mixed phenotype acute leukemia
* Philadelphia chromosome-positive myeloid neoplasms (AML or CML)
* Acute promyelocytic leukemia (APL), or
* Juvenile myelomonocytic leukemia (JMML) and related RASopathy disorders in chronic phase.
* Patients who have received ≥ 400 mg/m\^2 doxorubicin equivalents. For the purposes of determining eligibility for this protocol, the following cardiotoxicity multipliers will be used to determine doxorubicin equivalents:

* Doxorubicin (reference): 1
* Daunomycin: 0.5
* Epirubicin: 0.5
* Idarubicin: 5
* Mitoxantrone: 10
* Patients who are currently receiving another investigational drug.
* Patients receiving medications for treatment of left ventricular systolic dysfunction.
* Patients with documented active, uncontrolled infection at the time of study entry.
* Patients with known active HBV and HCV infections.
* Patients with prior allergy to daunorubicin and/or cytarabine.
* Pregnancy and breast feeding

* Female patients who are pregnant are ineligible due to risks of fetal and teratogenic adverse events as seen in animal/human studies.
* Lactating females who are breastfeeding an infant/child
* Female patients of childbearing potential are not eligible unless a negative pregnancy test result has been obtained.
* Sexually active patients of reproductive potential are not eligible unless they have agreed to use an effective contraceptive method for the duration of their study participation and for at least 6 months after the last dose of protocol therapy.