Myelodysplastic syndromes (MDS) and acute myeloid leukemia (AML) suppress normal hematopoietic activity in part by enabling a pathogenic inflammatory milieu in the bone marrow. In this report, we show that elevation of angiopoietin-1 in myelodysplastic CD34+ stem-like cells is associated with higher risk disease and reduced overall survival in MDS and AML patients. Increased angiopoietin-1 expression was associated with a transcriptomic signature similar to known MDS/AML stem-like cell profiles. In seeking a small molecule inhibitor of this pathway, we discovered and validated pexmetinib (ARRY-614), an inhibitor of the angiopoietin-1 receptor Tie-2, which was also found to inhibit the pro-inflammatory kinase p38 MAPK (which is overactivated in MDS). Pexmetinib inhibited leukemic proliferation, prevented activation of downstream effector kinases and abrogated the effects of TNF-alpha on healthy hematopoietic stem cells. Notably, treatment of primary MDS specimens with this compound stimulated hematopoiesis. Our results provide preclinical proof of concept for pexmetinib as a Tie-2/p38 MAPK dual inhibitor applicable to the treatment of MDS/AML.