Myelodysplastic syndromes (MDS) are malignant hematopoietic stem cell disorders that have the capacity to progress to acute myeloid leukemia (AML). Accumulating evidence suggests that the altered bone marrow (BM) microenvironment in general, and in particular the components of the stem cell niche, including mesenchymal stem cells (MSCs) and their progeny, play a pivotal role in the evolution and propagation of MDS. We here present an overview of the role of MSCs in the pathogenesis of MDS, with emphasis on cellular interactions in the BM microenvironment and related stem cell niche concepts. MSCs have potent immunomodulatory capacities and communicate with diverse immune cells, but also interact with various other cellular components of the microenvironment as well as with normal and leukemic stem and progenitor cells. Moreover, compared to normal MSCs, MSCs in MDS and AML often exhibit altered gene expression profiles, an aberrant phenotype, and abnormal functional properties. These alterations supposedly contribute to the “reprogramming” of the stem cell niche into a disease-permissive microenvironment where an altered immune system, abnormal stem cell niche interactions, and an impaired growth control lead to disease progression. The current article also reviews molecular targets that play a role in such cellular interactions and possibilities to interfere with abnormal stem cell niche interactions by using specific targeted drugs.