Myelodysplastic syndrome (MDS) is a disorder of hematopoietic stem cells (HSCs) that is often treated with DNA methyltransferase 1 (DNMT1) inhibitors (5-azacytidine [AZA], 5-aza-2'-deoxycytidine), suggesting a role for DNA methylation in disease progression. How DNMT inhibition retards disease progression and how DNA methylation contributes to MDS remain unclear. We analyzed global DNA methylation in purified CD34+ hematopoietic progenitors from MDS patients undergoing multiple rounds of AZA treatment. Differential methylation between MDS phenotypes was observed primarily at developmental regulators not expressed within the hematopoietic compartment and was distinct from that observed between healthy hematopoietic cell types. After AZA treatment, we observed only limited DNA demethylation at sites that varied between patients. This suggests that a subset of the stem cell population is resistant to AZA and provides a basis for disease relapse. Using gene expression data from patient samples and an in vitro AZA treatment study, we identified differentially methylated genes that can be activated following treatment and that remain silent in the CD34+ stem cell compartment of high-risk MDS patients. Haploinsufficiency in mice of one of these genes (NR4A2) has been shown to lead to excessive HSC proliferation, and our data suggest that suppression of NR4A2 by DNA methylation may be involved in MDS progression.