A 6-year-old boy presented with pancytopenia. Bone marrow morphology showed dyspoiesis and cytoplasmic vacuolation in myeloid precursor cells. Cytoplasmic vacuoles are described in erythroid cells in myelodysplastic syndrome (MDS) but are extremely rare in myeloid precursor cells. We ruled out viral and autoimmune etiology, hypocupremia, Pearson syndrome, and chromosomal abnormalities. Finally, a diagnosis of MDS of refractory cytopenia of childhood subtype was made. The patient then underwent an allogenic stem cell transplant that resulted in normalization of the complete blood counts and bone marrow morphology. However, he later developed late graft failure; this was followed by a second transplant after which he died of sepsis and multiorgan failure. The case is presented here for the rare morphologic features, hitherto not earlier described in pediatric MDS.