Myelodysplastic neoplasms (MDS) represent a heterogeneous group of malignant hematopoietic stem and progenitor cell (HSPC) disorders characterized by cytopenia, ineffective hematopoiesis, as well as the potential to progress to acute myeloid leukemia (AML). The pathogenesis of MDS is influenced by intrinsic factors, such as genetic insults, and extrinsic factors, including altered bone marrow microenvironment (BMM) composition and architecture. BMM is reprogrammed in MDS, initially to prevent the development of the disease but eventually to provide a survival advantage to dysplastic cells. Recently, inflammation or age-related inflammation in the bone marrow has been identified as a key pathogenic mechanism for MDS. Inflammatory signals trigger stress hematopoiesis, causing HSPCs to emerge from quiescence and resulting in MDS development. A better understanding of the role of the BMM in the pathogenesis of MDS has opened up new avenues for improving diagnosis, prognosis, and treatment of the disease. This article provides a comprehensive review of the current knowledge regarding the significance of the BMM to MDS pathophysiology and highlights recent advances in developing innovative therapies.