Myelodysplastic syndrome (MDS) is characterized by bone marrow failure and a strong propensity for leukemic evolution. Somatic mutations are critical early drivers of the disorder, but the factors enabling the emergence, selection, and subsequent leukemic evolution of these “leukemia-poised” clones remain incompletely understood. Emerging data point at the mesenchymal niche as a critical contributor to disease initiation and evolution. Disrupted inflammatory signaling from niche cells may facilitate the occurrence of somatic mutations, their selection, and subsequent clonal expansion. This review summarizes the current concepts about “niche-facilitated” bone marrow failure and leukemic evolution, their underlying molecular mechanisms, and clinical implications for future innovative therapeutic targeting of the niche in MDS.