We have demonstrated that 44% of myelodysplastic syndrome (MDS) patients with cytopenia have a haematological response to antithymocyte globulin (ATG). Three ATG responders and two non-responders with refractory anaemia were further studied for lymphocyte-mediated inhibition of bone marrow using a standard CFU-GM assay. In responders, peripheral blood lymphocytes (PBL) added at a 5:1 ratio suppressed CFU-GM by 54 ± 9% (P = 0.04) and was reversed by ATG treatment. Pre-treatment marrow depleted of CD3 lymphocytes, increased CFU-GM by 32% (P = 0.02) in an ATG responder, but not in a non-responder. CD3 lymphocytes from 6-month post-treatment marrow did not inhibit pre-treatment CFU-GM, indicating ATG had affected the T cells. Pre-treatment marrow depleted of CD8 lymphocytes, increased CFU-GM by 60% (P = 0.01) and 49% (P = 0.03) in two ATG responders, but not in a non-responder. Inhibition required cell–cell interaction through MHC I. TCR Vβ families, analysed by SSCP, changed from clonal to polyclonal in one ATG responder after 6 months, but clones persisted in a non-responder. These results indicate patients with refractory anaemia who respond to ATG have CD8 T-cell clones that mediate MHC-I-restricted suppression of CFU-GM which are replaced by polyclonal T cells that do not suppress CFU-GM after ATG treatment.