Abstract Decrease in DNA dioxygenase activity generated by TET2 gene family is crucial in myelodysplastic syndromes (MDS). The general downregulation of 5-hydroxymethylcytosine (5-hmC) argues for a role of DNA demethylation in MDS beyond TET2 mutations, which albeit frequent, do not convey any prognostic significance. We investigated TETs expression to identify factors which can modulate the impact of mutations and thus 5-hmC levels on clinical phenotypes and prognosis of MDS patients. DNA/RNA-sequencing and 5-hmC data were collected from 1665 patients with MDS and 91 controls. Irrespective of mutations, a significant fraction of MDS patients exhibited lower TET2 expression, whereas 5-hmC levels were not uniformly decreased. In searching for factors explaining compensatory mechanisms, we discovered that TET3 was upregulated in MDS and inversely correlated with TET2 expression in wild-type cases. Although TET2 was reduced across all age groups, TET3 levels were increased in a likely feedback mechanism induced by TET2 dysfunction. This inverse relationship of TET2 and TET3 expression also corresponded to the expression of L-2-hydroxyglutarate dehydrogenase, involved in agonist/antagonist substrate metabolism. Importantly, elevated TET3 levels influenced the clinical phenotype of TET2 deficiency whereby the lack of compensation by TET3 (low TET3 expression) was associated with poor outcomes of TET2 mutant carriers.