BLAST MRD AML-2: BLockade of PD-1 Added to Standard Therapy to Target Measurable Residual Disease in Acute Myeloid Leukemia 2- A Randomized Phase 2 Study of Anti-PD-1 Pembrolizumab in Combination With Azacitidine and Venetoclax as Frontline Therapy in Unfit Patients With Acute Myeloid Leukemia

Inclusion Criteria: * Newly diagnosed and pathologically-confirmed, previously untreated AML as defined by World Health Organization (WHO) criteria. Bone marrow biopsy, or aspirate or peripheral blood that were obtained up to 3 weeks before signing consent are allowed for purposes of confirming AML diagnosis for eligibility purposes. Secondary AML arising from prior myelodysplastic syndrome (MDS), as long as they have not received more than full cycle of hypomethylating agent therapy for MDS, and therapy related (t)-AML are also allowed. AML arising from antecedent hematologic disorders defined as prior MDS, myeloproliferative neoplasm (MPN), or aplastic anemia are allowed. Note 1: Patients must have evidence of bone marrow involvement on aspirate or biopsy. Patients with only extramedullary disease and no bone marrow involvement will be excluded. Note 2: Every effort should be made to get an aspirate for central flow assessment at screening and all subsequent required time points, but in cases where an aspirate cannot be collected-including dry taps-the patient will not be excluded and assessments will be performed on peripheral blood (PB) which should be collected at every time that bone marrow (BM) is collected. Note 3: Some patients with AML require initiation of therapy quickly after diagnosis, and full metaphase karyotype results in some centers can take 2-3 weeks to result. To avoid this issue being an impediment to accrual to study or to cause delays in initiation of therapy in patients who need fast initiation of therapy, we allow use of karyotype and/or fluorescence in situ hybridization (FISH) results on samples from blood or marrow that were obtained up to 3 weeks before signing consent for purposes of eligibility and stratification. In any case, results from FISH or karyotype should exclude presence of core-binding factor (CBF) abnormalities by time of randomization * Age \>= 60 years * Patients who are ineligible for intensive chemotherapy according to treating physician's assessment or who refuse intensive chemotherapy * Eastern Cooperative Oncology Group (ECOG) performance status of 0-3 * Prior use of lenalidomide, erythropoiesis-stimulating agents (ESAs), and growth factors is allowed if used to treat prior MDS. AML must be previously untreated except for hydroxyurea, or all-trans retinoic acid (ATRA) for suspicion of APL but both should be discontinued prior to initiation of study therapy. Hypomethylating agents are not allowed to have been used for AML therapy. If hypomethylating agent therapy was used for prior MDS or MPN therapy then it should not have exceeded one full cycle. Note: One dose of prophylactic intrathecal therapy is allowed during or before screening if a lumbar puncture is performed to rule out central nervous system (CNS) involvement * Hydroxyurea or leukopheresis are allowed for management of hyperleukocytosis, as well as ATRA, before initiation of study therapy. White blood cell (WBC) count must be \< 25 x 10\^9/L to start on study therapy per venetoclax label. Hydroxyurea and ATRA may be administered up to one day prior to start of study treatment * Intermediate-risk or poor risk AML as well as favorable risk by National Comprehensive Cancer Network (NCCN)/European LeukemiaNet (ELN) with the exception of "good-risk" cytogenic profile (i.e., for eligibility patient should lack the presence of t(8;21), (inv\[16\] or t\[16;16\]), or t(15;17) by full cytogenetics or FISH). Clarification: We allow use of karyotype and/or FISH results (as well as FLT3 results) on samples from blood or marrow that were obtained up to 3 weeks before signing consent for purposes of eligibility and stratification. Adverse karyotype can be determined based on FISH results (e.g., loss of chromosome 7 or 5 or 3 or more abnormalities) based on the specific probes used in the FISH. If results of full metaphase karyotype are not available and the available FISH results do not suggest an adverse karyotype, and there is a need to initiate therapy before those full results are available, then the patient can be stratified into the unknown/intermediate NCCN cytogenetic group for randomization purposes. In any case, results from FISH or karyotype should show that core-binding factor (CBF) abnormalities are NOT present by at time of randomization as the presence of CBF abnormalities is an exclusion factor * Creatinine =\< 1.5 x upper limit of normal (ULN) OR measured or calculated creatinine clearance (CrCl) \>= 60 mL/min for patient with creatinine levels \> 1.5 x institutional ULN * Creatinine clearance (CrCl) should be calculated per institutional standard * Glomerular filtration rate (GFR) can also be used in place of creatinine or CrCl * Total bilirubin =\< 1.5 x ULN OR direct bilirubin =\< ULN for patients with total bilirubin levels \> 1.5 x ULN * Aspartate aminotransferase (AST) (serum glutamic-oxaloacetic transaminase \[SGOT\]) and alanine aminotransferase (ALT) (serum glutamate pyruvate transaminase \[SGPT\]) =\< 3 x ULN OR =\< 5 x ULN for patients with liver metastases * Patients who are human immunodeficiency virus (HIV) positive may participate IF they meet the following eligibility requirements: * They must be stable on their anti-retroviral regimen, and they must be healthy from an HIV perspective * Patients must have an undetectable HIV viral load * Patients with a known history of hepatitis C virus (HCV) infection must have been treated and cured. For patients with HCV infection who are currently on treatment, they are eligible if they have an undetectable HCV viral load. For patients with evidence of chronic hepatitis B virus (HBV) infection, the HBV viral load must be undetectable on suppressive therapy, if indicated * Patients who have undergone major surgery must have recovered adequately from the toxicity and/or complications from the intervention prior to starting therapy * Female patients of childbearing potential must have a negative urine or serum pregnancy test within 72 hours prior to receiving the first dose of study medication. If the urine test is positive or cannot be confirmed as negative, a serum pregnancy test will be required. A female of childbearing potential is any woman, regardless of sexual orientation or whether they have undergone tubal ligation, who meets the following criteria: 1) has not undergone a hysterectomy or bilateral oophorectomy; or 2) has not been naturally postmenopausal for at least 24 consecutive months (i.e., has had menses at any time in the preceding 24 consecutive months). Female patients of childbearing potential must be willing to use an adequate method of contraception for the course of the study through 120 days after the last dose of study medication. Male patients who have a female partner of childbearing potential must agree to use an adequate method of contraception, starting with the first dose of study therapy through 120 days after the last dose of study therapy. NOTE: Abstinence is acceptable if this is the usual lifestyle and preferred contraception for the patient * Ability to understand and the willingness to sign a written informed consent document. Participants with impaired decision-making capacity (IDMC) who have a legally-authorized representative (LAR) and/or family member available will also be eligible Exclusion Criteria: * Patients with CBF-AML and acute promyelocytic leukemia (APL) * Received a prior anti-cancer monoclonal antibodies (mAb) within 4 weeks prior to study registration or have not recovered (recovery defined as baseline or =\< grade 1) from adverse events (AEs) due to agents administered more than 4 weeks earlier * Prior therapy with an anti-PD-1, anti-PD-L1, or anti-PD-L2 agent * Patients who have had chemotherapy, targeted small molecule therapy (aside from imatinib, dasatinib, or nilotinib, hydroxyurea, or ATRA), or radiotherapy within 4 weeks (6 weeks for nitrosoureas or mitomycin C) prior to entering the study * Left ventricular ejection fraction \< 50% as determined by either echocardiogram or MUGA * Patients who have not recovered from AEs due to prior anti-cancer therapy (i.e., have residual toxicities \> grade 1) with the exception of =\< grade 2 neuropathy and alopecia * NOTE: Participants must have recovered from all radiation-related toxicities, not require corticosteroids, and not have had radiation pneumonitis. A 1-week washout is permitted for palliative radiation (=\< 2 weeks of radiotherapy) to non-CNS disease * Patients currently participating and receiving study therapy or have participated in a study of an investigational agent and received study therapy or used an investigational device within 4 weeks of the first dose of treatment are ineligible * History of hypersensitivity to pembrolizumab (MK-3475) or any of its excipients, or other agents used in this study * Current use of systemic corticosteroids or immunosuppressive agents * EXCEPTION: Low doses of steroids (\< 10 mg of prednisone or equivalent dose of other steroid), used for treatment of non-hematologic medical condition (e.g., chronic adrenal insufficiency) inhaled corticosteroids, or topical steroids are permitted * Other active primary malignancy (other than non-melanomatous skin cancer or carcinoma in situ of the cervix) requiring treatment or limiting expected survival to =\< 2 years * NOTE: If there is a history of prior malignancy, they must not be receiving other specific treatment (other than hormonal therapy for their cancer) * Patient with known active CNS disease and/or carcinomatous meningitis before study enrollment. Assessment of the cerebrospinal fluid (CSF) is not required to enroll in the study unless there is clinical suspicion for CNS involvement. However, if CSF assessment is performed for any reason, there should be no evidence of active leukemia in the CSF as per investigator judgement. Up to one dose of prophylactic intrathecal chemotherapy is allowed prior to study enrollment. Subjects with previously treated brain metastases may participate provided they are stable (without evidence of progression by imaging for at least four weeks prior to the first dose of protocol treatment and any neurologic symptoms have returned to baseline), have no evidence of new or enlarging brain metastases, and are not using steroids for at least 7 days prior to protocol treatment. This exception does not include carcinomatous meningitis which is excluded regardless of clinical stability * Patients who received prior allogenic transplant * Patient with a history or current evidence of any condition, therapy, or laboratory abnormality that might confound the results of the trial, interfere with the subject's participation for the full duration of the trial, or is not in the best interest of the subject to participate, in the opinion of the treating investigator * Patient with a diagnosis of immunodeficiency or receiving high dose systemic steroid therapy or any other form of immunosuppressive therapy within 7 days prior to the first dose of treatment * Patient with active autoimmune disease except for patients with hypothyroidism and vitiligo that has required systemic treatment in the past 2 years (i.e., with use of disease modifying agents, corticosteroids or immunosuppressive drugs). Replacement therapy (e.g., thyroxine, insulin, or physiologic corticosteroid replacement therapy for adrenal or pituitary insufficiency, etc.) is not considered a form of systemic treatment * Patient with a known history of non-infectious pneumonitis that required the use of steroids or current non-infectious pneumonitis * Patient with active uncontrolled infection * Patient with a known history of active TB (Bacillus tuberculosis) * Patients with uncontrolled intercurrent illness * Patients with psychiatric illness/social situations that would limit compliance with study requirements * Pregnant women are excluded from this study because pembrolizumab (MK-3475) is humanized antibody with the potential for teratogenic or abortifacient effects. Because there is an unknown but potential risk for adverse events in nursing infants secondary to treatment of the mother with pembrolizumab, breastfeeding should be discontinued if the mother is treated with pembrolizumab. These potential risks may also apply to other agents used in this study * Patients with no bone marrow involvement (i.e., those with only extramedullary disease) * Patients who received prior hypomethylating agent (HMA) therapy for more than one full cycle in treatment for prior MDS. Patient must not have received HMA therapy for treatment of AML * Patients that received a live vaccine within 30 days of planned start of study therapy * NOTE: Seasonal influenza vaccines for injection are generally inactivated flu vaccines and are allowed; however intranasal influenza vaccines (e.g., Flu-Mist \[registered trademark\]) are live attenuated vaccines, and are not allowed * Patients with active hemolytic anemia requiring immunosuppressive therapy or other pharmacologic treatment. Patients who have a positive Coombs test but no evidence of hemolysis are NOT excluded from participation