Clonal progression to myelodysplastic syndrome (MDS) or acute myeloid leukemia (AML) remains a dreaded complication for a subset of patients with bone marrow failure (BMF). Recognizing risk factors for the development of MDS or AML would inform individualized treatment decisions and identify patients who may benefit from early or upfront hematopoietic stem cell transplantation. Now that next-generation DNA sequencing is available in the clinical laboratory, research has focused on the implications of germ line and somatic mutations for diagnosing and monitoring patients with BMF. Most germ line genetic BMF disorders are characterized by a high propensity to develop MDS or AML. Many affected patients lack the physical stigmata traditionally associated with the inherited marrow failure syndromes. Although any single inherited marrow failure disorder is rare, multiplexed genetic sequencing that allows simultaneous evaluation of marrow failure genes en masse demonstrated that, as a group, these inherited disorders compose a significant subset (5% to 10%) of patients with BMF. Early diagnosis of a germ line genetic marrow failure disorder allows individualized monitoring and tailored therapy. Recent studies of somatic variants in marrow failure revealed a high frequency of clonal hematopoiesis with the acquisition of mutations in genes associated with MDS or AML. Investigation of somatic mutations in marrow failure revealed important insights into the mechanisms promoting clonal disease but also raised additional questions. This review will focus on the evaluation and implications of germ line and somatic mutations for the development of clonal disorders in patients with BMF. Challenges and limitations of clinical genetic testing will be explored.