Myelodysplastic syndromes (MDS) are clonal disorders of hematopoietic stem and progenitor cells and represent the most common cause of acquired marrow failure. Hallmarked by ineffective hematopoiesis, dysplastic marrow, and risk of transformation to acute leukemia, MDS remains a poorly treated disease. Although identification of hematopoietic aberrations in human MDS has contributed significantly to our understanding of MDS pathogenesis, evidence now identify the bone marrow microenvironment (BMME) as another key contributor to disease initiation and progression. With improved understanding of the BMME, we are beginning to refine the role of the hematopoietic niche in MDS. Despite genetic diversity in MDS, interaction between MDS and the BMME appears to be a common disease feature, and therefore represents an appealing therapeutic target. Further understanding of the interdependent relationship between MDS and its niche is needed to delineate the mechanisms underlying hematopoietic failure and how the microenvironment can be clinically targeted. This review will provide an overview of data from human MDS and murine models supporting a role for BMME dysfunction at several steps of disease pathogenesis. While no models or human studies so far have combined all these findings, we will review current data identifying BMME involvement in each step of MDS pathogenesis, organized to reflect the chronology of BMME contribution as the normal hematopoietic system becomes myelodysplastic and MDS progresses to marrow failure and transformation. Although microenvironmental heterogeneity and dysfunction certainly add complexity to this syndrome, data are already demonstrating that targeting microenvironmental signals may represent novel therapeutic strategies for MDS treatment.