Mesenchymal stem cells (MSCs) have emerged as excellent candidates for clinical application because of their capabilities of immunomodulatory and supporting hematopoiesis. Nevertheless, it is unclear whether the characteristics of MSCs are altered in diseased states. In this study, we obtained and expanded MSCs from bone marrow of patients with myelodysplastic syndromes (MDS). Our results showed that MSCs derived from MDS (MDS-MSCs) were similar to normal adult bone marrow derived MSCs in morphology, growth property, surface epitopes, and differentiation ability in vitro. In addition, MDS-MSCs had normal karyotype and ultrastructure. However, MDS-MSCs appeared to be impaired in immunomodulatory and supporting hematopoiesis function. Although, MDS-MSCs could express hematopoietic cytokines and support hematopoiesis in long term culture, Real time quantitative polymerase chain reaction showed that the expression of hematopoietic cytokines in MDS-MSCs was much lower than that of normal adult derived MSCs. Moreover, MDS-MSCs showed reduced hematopoiesis support function, as compared to their normal counterparts. Lastly, the capacity of MDS-MSCs to inhibit T lymphocyte activation and proliferation was impaired in vitro. These results indicate that MDS-MSCs have impaired immunomodulatory and hematopoiesis support functions, suggesting their critical role in the pathogenesis of MDS.