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Myelodysplastic syndrome (MDS) is a heterogeneous group of hematopoietic neoplastic disorders that are characterized by ineffective myeloid differentiation and dysplasia as well as telomere shortening and accumulated DNA damage in progenitor cells. Less understood is whether DNA damage is the instigator of impaired progenitor cell differentiation and MDS development. Telomerase deficient mice have served as a model system to demonstrate the adverse effects of wide-spread endogenous DNA damage signaling on stem cell function in vivo. In recent studies, we sought to determine whether persistent physiological DNA damage can impair the function of specific hematopoietic lineages by employing the 4-hydroxytamoxifen (OHT)-inducible telomerase reverse transcriptase-estrogen receptor (TERTER) model. For the first time, we demonstrate that late generation TERTER/ER mice with dysfunctional telomeres exhibit hallmark features of MDS, including peripheral blood cytopenias, bone marrow (BM) hyper-cellularity, and an increased myeloid-to-erythroid progenitor ratio in the absence of increased apoptosis. Severe tri-lineage myelodysplasia, and an increase of immature, morphologically abnormal myeloid blasts frequently with pronounced monocytic differentiation were consistent with refractory anemia with excess of blasts (RAEB) or chronic myelo-monocytic leukemia (CMML), a specific sub-group of MDS that is characterized by a high propensity to develop acute myeloid leukemia (AML). Accordingly, approximately 5% of aged TERTER/ER mice progressed to AML, as demonstrated by a marked increase of BM myeloid blasts, and infiltration of myeloid precursors into the splenic white-red pulp architecture, resulting in myeloid sarcoma with the complete effacement of lymphoid follicles. Compared to control mice with intact telomeres, the progenitor compartment of telomere dysfunctional mice shows a significant increase in the number of granulocyte-macrophage progenitors (GMP) with a concomitant loss of the megakaryocyte-erythroid progenitors (MEP) and slight reduction in the number of common myeloid progenitors (CMP), which is consistent with the condition of skewed myeloid differentiation occurring in MDS patients with higher risk of leukemic transformation. Transplantation experiments of long-term hematopoietic stem cells isolated from telomere dysfunctional mice into wild type congenic recipients revealed that the level of donor-derived skewed myeloid differentiation was comparable to that observed at steady state in the same telomere dysfunctional mice before transplantation, suggesting that impaired progenitor differentiation occurred as a result of cell intrinsic defects of telomere dysfunctional hematopoietic cells. In the setting of telomere dysfunction, somatic in vivo and in vitro telomerase reactivation reduced DNA damage signaling and specifically reversed defective differentiation and MDS phenotypes. Unbiased transcriptomic network analyses of CMP with telomere dysfunction revealed profound down-regulation of genes in the mRNA splicing and processing pathways which was rescued by telomerase reactivation, indicating that telomere dysfunction-induced DNA damage response can impact on the expression of genes involved in splicing regulation. RNA-seq analysis of telomere dysfunctional CMP suggested altered splicing activity at the level of exon usage and identified aberrantly spliced variants of genes implicated in chromatin remodeling, and histone modifications. The prominence of aberrantly spliced epigenetic regulators prompted us to hypothesize that there was a link between impaired myeloid differentiation and aberrant splicing patterns as a result of telomere dysfunction-induced repression of splicing components. In conclusion, our studies have revealed an unanticipated link between telomere biology, RNA splicing, and MDS pathogenesis and support the development of strategies designed to modulate the downstream targets of splicing alterations in specific hematopoietic populations. Disclosures No relevant conflicts of interest to declare.