PURPOSE Salvage options for patients who relapse after allogeneic stem-cell transplantation (allo-SCT) for acute myeloid leukemia (AML) and myelodysplasia (MDS) remain limited, and novel treatment strategies are required. Both lenalidomide (LEN) and azacitidine (AZA) possess significant antitumor activity effect in AML. Administration of LEN post-transplantation is associated with excessive rates of graft-versus-host disease (GVHD), but AZA has been shown to ameliorate GVHD in murine transplantation models. We therefore examined the tolerability and activity of combined LEN/AZA administration in post-transplantation relapse. PATIENTS AND METHODS Twenty-nine patients who had relapsed after allo-SCT for AML (n = 24) or MDS (n = 5) were treated with sequential AZA (75 mg/m² for 7 days) followed by escalating doses of LEN on days 10 to 30. Dose allocation and maximum tolerated dose (MTD) estimation were guided by a modified Bayesian continuous reassessment method (CRM). RESULTS Sequential AZA and LEN therapy was well tolerated. The MTD of post-transplantation LEN, in combination with AZA, was determined as 25 mg daily. Three patients developed grade 2 to 4 GVHD. There was no GVHD-related mortality. Seven of 15 (47%) patients achieved a major clinical response after LEN/AZA therapy. CD8+ T cells demonstrated impaired interferon-γ/tumor necrosis factor–α production at relapse, which was not reversed during LEN/AZA administration. CONCLUSION We conclude LEN can be administered safely post-allograft in conjunction with AZA, and this combination demonstrates clinical activity in relapsed AML/MDS without reversing biologic features of T-cell exhaustion. The use of a CRM model delivered improved efficiency in MTD assessment and provided additional flexibility. Combined LEN/AZA therapy represents a novel and active salvage therapy in patients who had relapsed post-allograft.