Abstract The immunomodulatory drug lenalidomide induces cytogenetic remissions in 75% of patients with myelodysplastic syndrome (MDS) and del(5)(q31) through unknown mechanisms. We investigated the in vitro effects of lenalidomide on growth and maturation in differentiating erythroblasts from MDS patients with del(5)(q31) (n=13) and from healthy controls (n=10). Lenalidomide selectively inhibited growth of del(5q) erythroblasts, while not affecting normal cells, including cytogenetically normal cells from MDS del(5q) patients. The inhibitory effect was more pronounced in erythroid than in myeloid cells. In order to gain insight into the mode of action of lenalidomide and to identify the molecular targets of this drug, we have investigated the gene expression profiles of the lenalidomide-treated and untreated intermediate erythroblasts from MDS del(5q) patients (n=9) and from healthy controls (n=8). GeneChip Human Genome U133 Plus 2.0 arrays (Affymetrix), covering over 47,000 transcripts representing 39,000 human genes, were used. Treatment with lenalidomide significantly influenced the pattern of gene expression in del(5q) intermediate erythroblasts, with up-regulation of VSIG4, PPIC, TPBG, and SPARC in all samples, and down-regulation of many genes involved in erythropoiesis, including HBA2, GYPA, and KLF1, in most samples. Up-regulation of SPARC (median 4.4-fold, range 2.4–9.5) is of particular interest since SPARC, a gene with known tumor suppressor functions, is both anti-proliferative and anti-angiogenic, and is located at 5q31–q32, within the commonly deleted region in MDS 5q- syndrome. Activin A was one of the most significant differentially expressed genes between lenalidomide-treated cells of MDS del(5q) patients and healthy controls. Activin A is a member of the transforming growth factor-beta superfamily, with pleiotropic functions including apoptosis of hemopoietic cells. We conclude that lenalidomide specifically inhibits growth of del(5q) erythroid progenitors, while not affecting cytogenetically normal cells. These novel findings suggest that up-regulation of SPARC and Activin A may underlie the potent effects of lenalidomide, in particular growth inhibition and anti-angiogenesis, in MDS with del(5)(q31). The localization of the SPARC gene to the CDR of the 5q- syndrome is intriguing and, in relation to the findings of the present study, we suggest that SPARC may well play a role in the molecular pathogenesis of the 5q- syndrome.