Myelodysplastic syndromes (MDSs) are a group of hematopoietic stem cell disorders characterized by ineffective hematopoiesis and peripheral blood cytopenias. Lenalidomide has dramatic therapeutic effects in patients with low-risk MDS and a chromosome 5q31 deletion, resulting in complete cytogenetic remission in >60% of patients. The molecular basis of this remarkable drug response is unknown. To gain insight into the molecular targets of lenalidomide we investigated its in vitro effects on growth, maturation, and global gene expression in isolated erythroblast cultures from MDS patients with del(5)(q31). Lenalidomide inhibited growth of differentiating del(5q) erythroblasts but did not affect cytogenetically normal cells. Moreover, lenalidomide significantly influenced the pattern of gene expression in del(5q) intermediate erythroblasts, with the VSIG4, PPIC, TPBG, activin A, and SPARC genes up-regulated by >2-fold in all samples and many genes involved in erythropoiesis, including HBA2, GYPA, and KLF1, down-regulated in most samples. Activin A, one of the most significant differentially expressed genes between lenalidomide-treated cells from MDS patients and healthy controls, has pleiotropic functions, including apoptosis of hematopoietic cells. Up-regulation and increased protein expression of the tumor suppressor gene SPARC is of particular interest because it is antiproliferative, antiadhesive, and antiangiogenic and is located at 5q31-q32, within the commonly deleted region in MDS 5q- syndrome. We conclude that lenalidomide inhibits growth of del(5q) erythroid progenitors and that the up-regulation of SPARC and activin A may underlie the potent effects of lenalidomide in MDS with del(5)(q31). SPARC may play a role in the pathogenesis of the 5q- syndrome.