Shwachman-Diamond syndrome (SD), an inherited disorder with varying cytopenias and a marked tendency for malignant myeloid transformation, is an important model for understanding genetic determinants in hematopoiesis. To define the basis for the faulty hematopoietic function, 13 patients with SD (2 of whom had myelodysplasia with a clonal cytogenetic abnormality) and 11 healthy marrow donors were studied. Patients with SD had significantly lower numbers of CD34(+) cells on bone marrow aspirates. SD CD34(+) cells plated directly in standard clonogenic assays showed markedly impaired colony production potential, underscoring an intrinsically aberrant progenitor population. To assess marrow stromal function, long-term marrow stromal cell cultures (LTCs) were established. Normal marrow CD34(+) cells were plated over either SD stroma (N/SD) or normal stroma (N/N); SD CD34(+) cells were plated over either SD stroma (SD/SD) or normal stroma (SD/N). Nonadherent cells harvested weekly from N/SD LTCs were strikingly reduced compared with N/N LTCs; numbers of granulocyte-monocyte colony-forming units (CFU-GM) derived from N/SD nonadherent cells were also lower. SD/N showed improved production of nonadherent cells and CFU-GM colonies compared with SD/SD, but much less than N/N. Stem-cell and stromal properties from the 2 patients with SD and myelodysplasia did not differ discernibly from SD patients without myelodysplasia. We conclude that in addition to a stem-cell defect, patients with SD have also a serious, generalized marrow dysfunction with an abnormal bone marrow stroma in terms of its ability to support and maintain hematopoiesis. This dual defect exists in SD with and without myelodysplasia.