Myelodysplastic syndromes (MDS) are stem cell disorders that can progress to acute myeloid leukemia. Although hematopoietic cell transplantation can be curative, additional therapies are needed for a disease that disproportionally afflicts the elderly. We tested the ability of a CD16xCD33 BiKE to induce natural killer (NK) cell function in 67 MDS patients. Compared with age-matched normal controls, CD7(+) lymphocytes, NK cells, and CD16 expression were markedly decreased in MDS patients. Despite this, reverse antibody-dependent cell-mediated cytotoxicity assays showed potent degranulation and cytokine production when resting MDS-NK cells were triggered with an agonistic CD16 monoclonal antibody. Blood and marrow MDS-NK cells treated with bispecific killer cell engager (BiKE) significantly enhanced degranulation and tumor necrosis factor-α and interferon-γ production against HL-60 and endogenous CD33(+) MDS targets. MDS patients had a significantly increased proportion of immunosuppressive CD33(+) myeloid-derived suppressor cells (MDSCs) that negatively correlated with MDS lymphocyte populations and CD16 loss on NK cells. Treatment with the CD16xCD33 BiKE successfully reversed MDSC immunosuppression of NK cells and induced MDSC target cell lysis. Lastly, the BiKE induced optimal MDS-NK cell function irrespective of disease stage. Our data suggest that the CD16xCD33 BiKE functions against both CD33(+) MDS and MDSC targets and may be therapeutically beneficial for MDS patients.