A case is presented of a child with mosaic Down syndrome, who presented at birth with a transient leukemia and later progressed to megakaryoblastic leukemia. Evidence is presented that both leukemias were of megakaryoblastic lineage and evolved from a trisomic hematopoietic precursor. This case is unique in the poor course of the initial transient neonatal leukemia with improvement following chemotherapy. It also highlights the form of leukemia and associated myelodysplasia that occurs in children with Down syndrome. This form of leukemia and transient leukemia are interrelated and are unique to children with Down syndrome.