Immunosuppressive therapies have proven valuable in treating patients with myelodysplastic syndromes (MDS). We evaluated the combination of equine anti-thymocyte globulin (ATGAM) and the soluble tumour necrosis factor receptor, etanercept (Enbrel), in a phase II trial. Twenty-five patients with MDS [4-refractory anaemia (RA), 2-RA with ring sideroblasts, 15-refractory cytopenia with multilineage dysplasia (RCMD), 3-RCMD and ring sideroblasts, 1-RA with excess blasts type 1] in International Prognostic Staging System risk groups low (n = 11) or intermediate-1 (n = 14) were enrolled. All patients were platelet or red cell transfusion-dependent. Nineteen patients completed therapy with ATG at 40 mg/kg per day for four consecutive days, followed by etanercept, 25 mg subcutaneous twice a week for 2 weeks, every month for 4 months. Thirteen patients had haematological improvement (HI)-erythroid, 2 HI-neutrophil, and 6 HI-platelet. One patient with a co-existing diagnosis of multiple sclerosis and rheumatoid arthritis had a complete remission. The overall response by intent to treat analysis among the 25 patients was 56% (95% confidence interval 35-56%). Four patients did not complete their first course of therapy and one patient did not survive to the 8-week post-treatment assessment. Among patients who completed treatment and survived to the 8-week assessment, 70% had at least haematological responses lasting for at least 5 to more than 36 months. Thus, combination therapy with ATG and etanercept was active and safe in patients with MDS.