Liposome-encapsulated Daunorubicin-Cytarabine and Venetoclax in Treating Participants With Relapsed, Refractory or Untreated Acute Myeloid Leukemia

Inclusion Criteria: * For the lead in phase: Patients \>= 18 years of age with a diagnosis of relapsed and/or refractory AML will be eligible. Patients who have had prior treatment with venetoclax will be allowed to participate in the lead in phase and cohort A * For the dose expansion cohort A (relapsed/refractory \[R/R\] AML): Patients \>= 18 years of age with a diagnosis of relapsed and/or refractory AML will be eligible * For the dose expansion cohort B (de novo AML): Patients \>= 18 years to 69 years of age; patients in this cohort must have received no prior therapy for AML * Prior therapy with hydroxyurea, hematopoietic growth factors, or tretinoin (ATRA) (for emergency use for stabilization) is allowed with no washout. A cumulative dose of ara-C of up to 3 g for emergency stabilization in patients with rapidly proliferating disease is also allowed provided it was administered \> 48 hrs prior to enrollment * Bilirubin =\< 2 mg/dL * Aspartate aminotransferase (AST) and/or alanine aminotransferase (ALT) =\< 3 x upper limit of normal (ULN) or \< 5 x ULN if related to leukemic involvement * Creatinine =\< 1.5 x ULN * Known cardiac ejection fraction of \> or = 45% within the past 3 months * Eastern Cooperative Oncology Group (ECOG) performance status of =\< 2 * A negative urine or serum pregnancy test is required within 1 week for all women of childbearing potential prior to enrolling on this trial. A woman of childbearing potential is defined as a woman who has not been naturally postmenopausal for at least 12 consecutive months, or who had no previous surgical sterilization * Patient must have the ability to understand the requirements of the study and signed informed consent. A signed informed consent by the patient or his legally authorized representative is required prior to their enrollment on the protocol Exclusion Criteria: * Pregnant women are excluded from this study because the agents used in this study have the potential for teratogenic or abortifacient effects. Because there is a potential risk for adverse events in nursing infants secondary to treatment of the mother with the chemotherapy agents, breastfeeding should also be avoided * Uncontrolled intercurrent illness including, but not limited to active uncontrolled infection, symptomatic congestive heart failure (New York Heart Association \[NYHA\] class III or IV), unstable angina pectoris, clinically significant cardiac arrhythmia, or psychiatric illness/social situations that would limit compliance with study requirements * Patient with documented hypersensitivity to any of the components of the chemotherapy program * Patients with acute promyelocytic leukemia (M3) or core-binding factor AML * Patients with active central nervous system (CNS) leukemia are excluded since the antileukemia activity of the treatment components against CNS leukemia are not known * Men and women of childbearing potential who do not practice contraception. Women of childbearing potential and men must agree to use contraception prior to study entry and for the duration of study participation * Prior treatment with CPX-351 or venetoclax. Patients with prior treatment with venetoclax will be allowed in patients with relapsed/refractory (R/R) disease including those in the lead-in phase as well as those in cohort A