Myelodysplastic syndrome (MDS) is a disease characterized by ineffective hematopoiesis. There are significant biologic and clinical differences between MDS and acute myeloid leukemia (AML). We studied a cohort of 802 patients, 279 (35%) with newly diagnosed MDS and 523 (65%) with newly diagnosed AML, and compared clinical and biologic characteristics of the 2 groups. Complete clinical and cytogenetic data were available on all patients, and a subgroup of patients was studied for apoptosis, angiogenesis, proliferation, and growth factors. Our results demonstrate that MDS is a discrete entity that is different from AML and is characterized primarily by increased apoptosis in early and mature hematopoietic cells. Using cell sorting and loss of heterozygosity, we demonstrate that the leukemic cells from MDS patients are capable of differentiation into mature myeloid cells and monocytes. We also demonstrate that there is a significant overlap between AML and MDS when MDS is defined on the basis of an arbitrary percentage of blasts of 20% or 30%. These data suggest that despite similarities between AML and MDS in their responses to treatment and outcomes, MDS is biologically and clinically different from AML and should not be considered an early phase of AML. The data indicate that MDS must be better defined on the basis of its biology rather than the percentage of blasts; further, the data suggest that there is a need to develop therapeutic approaches that specifically address the biologic abnormalities of MDS.