RATIONALE: Drugs used in chemotherapy use different ways to stop cancer cells from dividing so they stop growing or die. Monoclonal antibodies can locate cancer cells and either kill them or deliver cancer-killing substances to them without harming normal cells. Combining monoclonal antibody therapy with chemotherapy may kill more cancer cells.

PURPOSE: Randomized phase II trial to compare the effectiveness of fludarabine given with or without monoclonal antibody therapy followed by monoclonal antibody therapy alone in treating patients who have untreated B-cell chronic lymphocytic leukemia.

OBJECTIVES: I. Determine the response rate and toxicity profile of concurrent and consolidative chimeric anti-CD20 monoclonal antibody IDEC-C2B8 (rituximab) therapy compared to consolidative rituximab therapy in patients with chronic lymphocytic leukemia treated with fludarabine. II. Assess the complete response (CR) rate in patients receiving concurrent therapy with rituximab and fludarabine. III. Assess the frequency of conversion of a partial response (PR) to a CR or stable disease to either PR or CR in patients receiving consolidative therapy with rituximab. IV. Follow the effects of rituximab and fludarabine on the immunologic markers CD4, CD8, IgG, IgA, and IgM. V. Assess the progression-free and overall survival of these patients.

OUTLINE: This is a randomized study. Patients are stratified according to stage (I and II vs III and IV). Patients are assigned to 1 of 2 treatment arms. Arm I consists of fludarabine and chimeric anti-CD20 monoclonal antibody IDEC-C2B8 (rituximab) induction, and arm II consists of fludarabine induction. Arm I: Rituximab is administered IV over 4 hours on day 1, on day 3, and over 1 hour on day 5 of week 1. Subsequent doses are given over 1 hour on day 1 every 4 weeks for a total of 6 courses. Fludarabine IV is administered over 10-30 minutes daily for 5 days during weeks 1, 5, 9, 13, 17, and 21 for a total of 6 courses. Following the sixth course of fludarabine, patients undergo clinical staging and are then observed for an additional 2 months, after which they undergo repeat clinical staging, including bone marrow aspiration. Patients achieving a complete or partial response or stable disease then proceed to consolidation therapy consisting of weekly intravenous infusions of rituximab once weekly for 4 weeks. Arm II (Fludarabine Induction): Patients receive fludarabine IV over 10-30 minutes daily for 5 days during weeks 1, 5, 9, 13, 17, and 21 for a total of 6 courses. Patients then proceed as in arm I. Patients are followed every 3 months for 1 year, and then every 6 months thereafter.

PROJECTED ACCRUAL: A maximum of 100 patients will be accrued for this study within 12 months.

DISEASE CHARACTERISTICS: Histologically proven B-cell chronic lymphocytic leukemia Stage I or II with evidence of active disease as defined by: Massive or progressive splenomegaly and/or lymphadenopathy Weight loss of greater than 10% within 6 months CALGB grade 2 or 3 fatigue Fevers of greater than 100.5 C or night sweats for over 2 weeks and no evidence of infection Progressive lymphocytosis Stage III or IV Patient registration on CALGB 9665 required

PATIENT CHARACTERISTICS: Age: 18 and over Performance status: CALGB 0-3 Life expectancy: Not specified Hematopoietic: Not specified Hepatic: Not specified Renal: Creatinine no greater than 1.5 times upper limit of normal Other: No medical condition requiring chronic use of oral corticosteroids Direct antiglobulin test or direct Coombs test negative Not pregnant Effective contraception required of all fertile patients

PRIOR CONCURRENT THERAPY: Biologic: No prior biologic therapy for disease No concurrent erythropoietin Chemotherapy: No concurrent chemotherapy No prior chemotherapy for disease Endocrine: No concurrent chronic oral corticosteroids No prior corticosteroids for autoimmune complications developing since diagnosis No concurrent hormone therapy for disease related conditions No concurrent dexamethasone or other corticosteroid-based antiemetics Radiotherapy: No concurrent palliative radiotherapy Surgery: Not specified Other: No prophylactic therapy for viral, bacterial, or fungal infections