The category of refractory anaemia with excess blasts in transformation (RAEBt) of the French-American-British (FAB) classification system comprises a heterogeneous group of patients: those with any combination of 5% or more blood blast cells, more than 20% but no more than 30% marrow blast cells, or the presence of auer rods and 30% or less marrow blast cells. To determine the prognostic significance of auer rods in RAEBt, we classified the 208 patients with RAEBt seen between 1973 and 1992 as (1) those having RAEBt solely on the basis of auer rods (RAEBta, n = 29), (2) those meeting blood or marrow blast criteria for RAEBt and also having auer rods (RAEBtpos, n = 40) or (3) those meeting blood or marrow blast criteria for RAEBt without having auer rods (RAEBtneg, n = 139). The RAEBta group had a higher survival probability than either of the other two groups. Within RAEBta, those patients who, without auer rods, would be considered RAEB by the FAB system (n = 19) had a higher probability of survival than patients with RAEB as conventionally defined. Furthermore, patients with RAEBtpos were more likely to live longer than those with RAEBtneg. The RAEBta, RAEBtpos and RAEBtneg groups were similar with regard to the usual haematologic parameters. However, patients with auer rods were more likely to have a normal karyotype and less likely to have prognostically unfavourable cytogenetic abnormalities. When analysis was performed within cytogenetic groups, the favourable prognostic impact of auer rods was still evident. Similarly, the favourable prognostic significance of auer rods was discernible both among patients who did not receive intensive therapy and those who received induction chemotherapy. The complete remission rate in auer rod positive patients was 77%, compared to 27% in those without auer rods. There were no differences in remission duration. Our results suggest that: (1) patients with auer rods without blood or bone marrow blast criteria for RAEBt should not be grouped with those patients with such criteria, and (2) patients with auer rods and other criteria for RAEBt have a higher complete remission rate following induction therapy of the type frequently reserved for patients with acute myeloid leukaemia.