The bone marrow failure states, aplastic anemia and myelodysplastic syndrome, are characterized by reticulocytopenic anemia, with variable neutropenia and thrombocytopenia. The bone marrow biopsy is very hypocellular in aplastic anemia, but it is usually hypercellular in myelodysplastic syndrome. Marrow cytogenetic abnormalities are present in approximately half of myelodysplastic syndrome patients but are absent in aplastic anemia. Allogeneic bone marrow transplantation is the treatment of choice for young patients with severe aplastic anemia. Immunosuppressive therapy with antithymocyte globulin (ATG) and cyclosporine is used when transplantation is not the initial therapeutic choice; it induces responses in 65% to 80% of patients. Treatment of myelodysplastic syndrome is dependent upon risk classification, and patient age and performance status. Allogeneic stem cell transplantation should be considered for younger myelodysplastic syndrome patients. An acute myelogenous leukemia (AML) type of induction chemotherapy may benefit high-risk patients with a good performance status for whom allogeneic transplantation is not an option. Patients achieving a complete remission to induction chemotherapy may be considered for autologous stem cell transplantation. However, aggressive therapy is an option for only a minority of myelodysplastic syndrome patients; most receive supportive care. Anemia, and its related symptoms, is the principal problem for most myelodysplastic syndrome patients. Erythropoietin administration ameliorates anemia in a minority of myelodysplastic syndrome patients. A wide variety of novel experimental approaches including immunosuppressive therapy, angiogenesis inhibitors, platelet growth factors, and demethylating agents are now under investigation for myelodysplastic syndrome.