In vitro evidence suggests that the bone marrow microenvironment (BMME) is altered in myelodysplastic syndromes (MDSs). Here, we study the BMME in MDS in vivo using a transgenic murine model of MDS with hematopoietic expression of the translocation product NUP98-HOXD13 (NHD13). This model exhibits a prolonged period of cytopenias prior to transformation to leukemia and is therefore ideal to interrogate the role of the BMME in MDS. In this model, hematopoietic stem and progenitor cells (HSPCs) were decreased in NHD13 mice by flow cytometric analysis. The reduction in the total phenotypic HSPC pool in NHD13 mice was confirmed functionally with transplantation assays. Marrow microenvironmental cellular components of the NHD13 BMME were found to be abnormal, including increases in endothelial cells and in dysfunctional mesenchymal and osteoblastic populations, whereas megakaryocytes were decreased. Both CC chemokine ligand 3 and vascular endothelial growth factor, previously shown to be increased in human MDS, were increased in NHD13 mice. To assess whether the BMME contributes to disease progression in NHD13 mice, we performed transplantation of NHD13 marrow into NHD13 mice or their wild-type (WT) littermates. WT recipients as compared with NHD13 recipients of NHD13 marrow had a lower rate of the combined outcome of progression to leukemia and death. Moreover, hematopoietic function was superior in a WT BMME as compared with an NHD13 BMME. Our data therefore demonstrate a contributory role of the BMME to disease progression in MDS and support a therapeutic strategy whereby manipulation of the MDS microenvironment may improve hematopoietic function and overall survival.