Patients with myelodysplastic syndrome (MDS) have ineffective in vivo and in vitro erythropoiesis, characterized by an impaired response to erythropoietin (Epo). We examined proliferation and maturation of MDS marrow cells in response to Epo in more detail. Epo-dependent DNA synthesis as well as induction of GATA-1 binding activity in marrow cells from 15 MDS cases were severely reduced as compared with normal bone marrow (NBM). Additionally, the appearance of morphologically identifiable erythroid cells was decreased in MDS cell cultures. These data indicate that both the Epo-dependent proliferation as well as the differentiation induction by Epo is suppressed. To study more upstream events of the Epo signal transduction route we investigated activation of the signal transducer and activator of transcription (STAT) 5. In all 15 MDS samples tested, STAT5 activation was absent or greatly suppressed in response to Epo. In contrast, interleukin-3 induced a normal STAT5 response in MDS cells. Further, in MDS the subset of CD71+ BM cells that is phenotypically similar to Epo-responsive cells in normal marrow, was present. We conclude that the Epo response in MDS is disturbed at an early point in the Epo-receptor (EpoR) signal transduction pathway.