Peripheral stem cell assay was done to examine the hematopoietic status of myelodysplastic syndrome (MDS). Four patients with refractory anemia with excess of blasts (RAEB) and 6 with RAEB in transformation (RAEBt) were studied. Efficiencies of colony and cluster formation were not different between RAEB and RAEBt, but colony/cluster ratios in RAEBt tended to be lower than in either RAEB or healthy individuals. Patients were classified into 2 groups, Group A and B, according to the colony/cluster formations. In Group A efficiencies of colony/cluster formation were higher than those in healthy individuals, and in Group B they were lower. Bone marrow nucleated cell counts and peripheral white blood cell counts were not different between Groups A and B. Leukemic conversions were recognized in 4 out of 5 cases in Group B and 2 out of 5 cases in Group A, respectively. On the other hand monocytosis developed in 3 out of 5 cases in Group A, but none in Group B. Some of the colonies and clusters were composed of myeloperoxidase (MPO)-negative neutrophils, although a significant increase of MPO-negative neutrophils was not present in original marrow or peripheral blood. Colonies and clusters in patients with leukemic conversions in Group A were composed of cells with blastlike morphology. These findings indicate that the quantitative and qualitative analyses of colonies and clusters are useful not only for the prediction of leukemic conversion but also for analyses of pathophysiological aspects such as ineffective hemopoiesis and monocytosis in MDS.