DNA hypomethylating agents (HMAs) are used to treat acute myeloid leukemia (AML) and myelodysplasia patients who are unsuitable for intensive chemotherapy. However, low response rates and therapy-resistant relapse remain significant challenges. To improve outcomes, we must understand how AML cells survive HMA treatment and continue to proliferate following therapy. We combine single-cell multiomics with parallel colony-forming assays to link HMA-induced heterogeneity with functional consequences in AML cellss. Azacytidine (AZA) and decitabine (DAC) induced global epigenetic heterogeneity, associated with upregulation of inflammatory responses and cell death pathways in a subset of hypomethylated cells. Some cells maintained high DNA methylation levels during treatment, and these methylation-retaining cells had increased self-renewal capacity following DAC treatment in two FLT3-ITD AML cell lines. Transcriptional profiling of colonies formed after HMA treatment revealed many genes with altered expression in both methylation-retaining and hypomethylated cells, with increased expression of cholesterol-related genes observed in all cell lines. Inhibition of the cholesterol biosynthesis pathway by rosuvastatin enhanced HMA effects on colony formation in vitro and extended survival in two in vivo models of AML. Our study demonstrates that HMA-induced epigenetic heterogeneity has implications for AML cell growth and identifies statins as a candidate co-treatment strategy to improve HMA efficacy.