Vascular endothelial growth factor (VEGF) is a potent angiogenic peptide with biologic effects that include regulation of hematopoietic stem cell development, extracellular matrix remodeling, and inflammatory cytokine generation. To delineate the potential role of VEGF in patients with myelodysplastic syndrome (MDS), VEGF protein and receptor expression and its functional significance in MDS bone marrow (BM) were evaluated. In BM clot sections from normal donors, low-intensity cytoplasmic VEGF expression was detected infrequently in isolated myeloid elements. However, monocytoid precursors in chronic myelomonocytic leukemia (CMML) expressed VEGF in an intense cytoplasmic pattern with membranous co-expression of the Flt-1 or KDR receptors, or both. In situ hybridization confirmed the presence of VEGF mRNA in the neoplastic monocytes. In acute myelogenous leukemia (AML) and other MDS subtypes, intense co-expression of VEGF and one or both receptors was detected in myeloblasts and immature myeloid elements, whereas erythroid precursors and lymphoid cells lacked VEGF and receptor expression. Foci of abnormal localized immature myeloid precursors (ALIP) co-expressed VEGF and Flt-1 receptor, suggesting autocrine cytokine interaction. Antibody neutralization of VEGF inhibited colony-forming unit (CFU)-leukemia formation in 9 of 15 CMML and RAEB-t patient specimens, whereas VEGF stimulated leukemia colony formation in 12 patients. Neutralization of VEGF activity suppressed the generation of tumor necrosis factor-α and interleukin-1β from MDS BM–mononuclear cells and BM–stroma and promoted the formation of CFU-GEMM and burst-forming unit-erythroid in methylcellulose cultures. These findings indicate that autocrine production of VEGF may contribute to leukemia progenitor self-renewal and inflammatory cytokine elaboration in CMML and MDS and thus provide a biologic rationale for ALIP and its adverse prognostic relevance in high-risk MDS.