Myelodysplastic syndromes (MDS) are characterized by ineffective hematopoiesis with potential for progression to acute myeloid leukemia (AML). We compared natural killer (NK) cytolytic function in 48 MDS patients with 37 healthy donors and found reduced activity in the patient population (K562 cytolysis, 19% +/- 21% SD versus 40% +/- 17%) (P < .001). NK cytotoxicity in MDS patients was reduced against 3 disparate tumor targets with differential activating receptor requirement, suggesting global defects in NK function. Reduced NK function in MDS was significantly associated with higher International Prognostic Score (P = .01), abnormal karyotype (P = .05), the presence of excess blasts (P = .01), and age-adjusted bone marrow hypercellularity (P = .04). MDS patients had a display of the activating receptor NKp30, and NKG2D down-regulation closely correlated with impaired NK function (P = .001). NKG2D ligands (MICA and MICB) were expressed on CD34(+) cells from bone marrow of 30% of MDS patients and a leukemic cell line derived from an MDS patient (MDS1). Collectively, these findings suggest that impairment of NK cytolytic function derives in part from reduced activating NK receptors such as NKG2D in association with disease progression. Evasion of NK immunosurveillance may have importance for MDS disease progression.