Myelodysplastic syndromes (MDS) comprise hematological disorders that originate from the neoplastic transformation of hematopoietic stem cells (HSCs). However, discrimination between HSCs and their neoplastic counterparts in MDS-derived bone marrows (MDS-BMs) remains challenging. We hypothesized that in MDS patients immature CD34+CD38− cells with aberrant expression of immunophenotypic markers reflect neoplastic stem cells and that their frequency predicts leukemic progression. We analyzed samples from 68 MDS patients and 53 controls and discriminated HSCs from immunophenotypic aberrant HSCs (IA-HSCs) expressing membrane aberrancies (CD7, CD11b, CD22, CD33, CD44, CD45RA, CD56, CD123, CD366 or CD371). One-third of the MDS-BMs (23/68) contained IA-HSCs. The presence of IA-HSCs correlated with perturbed hematopoiesis (disproportionally expanded CD34+ subsets beside cytopenias) and an increased hazard of leukemic progression (HR = 25, 95% CI: 2.9–218) that was independent of conventional risk factors. At 2 years follow-up, the sensitivity and specificity of presence of IA-HSCs for predicting leukemic progression was 83% (95% CI: 36–99%) and 71% (95% CI: 58–81%), respectively. In a selected cohort (n = 10), most MDS-BMs with IA-HSCs showed genomic complexity and high human blast counts following xenotransplantation into immunodeficient mice, contrasting MDS-BMs without IA-HSCs. This study demonstrates that the presence of IA-HSCs within MDS-BMs predicts leukemic progression, indicating the clinical potential of IA-HSCs as a prognostic biomarker.