• Overall Response Rate (RR) (as defined by modified international working group standardized response criteria) [ Time Frame: 1.5 years ] [ Designated as safety issue: No ]
  

• Percent with hematologic improvement [ Time Frame: 1.5 years ] [ Designated as safety issue: No ]
  
• Percent with cytogenetic remission [ Time Frame: 1.5 years ] [ Designated as safety issue: No ]
  
• Overall, progression-free and leukemia-free-survival [ Time Frame: 1.5 yrs ] [ Designated as safety issue: No ]
  
• Percent reduction in baseline biomarkers of angiogenesis including: circulating endothelial cells (CEC) and precursors (CEP), plasma and marrow VEGF and VEGFR 1-2 levels [ Time Frame: 1.5 yrs ] [ Designated as safety issue: No ]
  
• Safety (type, frequency, severity, and relationship of adverse events to study therapy) [ Time Frame: 1.5 yrs ] [ Designated as safety issue: Yes ]
  

Inclusion Criteria:

1. Understand and voluntarily sign an informed consent form.
2. Age 18 years or older at the time of signing the informed consent form.
3. Able to adhere to the study visit schedule and other protocol requirements.
4. Must have a diagnosis of high-intermediate or high risk MDS (de novo or secondary) or CMML fitting any of the following classifications (including CMML with wbc < 12,000 x 109/L) and IPSS > 1.5 or proliferative form of CMML (wbc > 12,000 x 109/L for which the IPSS does not apply). If the patient has unsuccessful cytogenetics, patients with WHO classification of transfusion dependent RAEB-1 will be eligible (see appendix B and C for WHO MDS classification).
5. All previous cancer therapy, including radiation, hormonal therapy and surgery, must have been discontinued at least 4 weeks (6 weeks for 5-Azacitidine or bone marrow transplant) prior to treatment in this study.
6. ECOG performance status of <= 2 at study entry (see Appendix A).

7. Laboratory test results within these ranges:

   • Serum calcium <3.0 mmol/L
   • Serum creatinine < 1.5 mg/dL
   • Total bilirubin < 1.5 mg/dL
   • AST (SGOT) and ALT (SGPT) < 2 x ULN

Exclusion Criteria:

1. Any serious medical condition, laboratory abnormality, or psychiatric illness that would prevent the subject from signing the informed consent form.
2. Pregnant or breast-feeding females. (Lactating females must agree not to breast feed while taking lenalidomide).
3. Any condition, including the presence of laboratory abnormalities, which places the subject at unacceptable risk if he/she were to participate in the study or confounds the ability to interpret data from the study.
4. Use of any other experimental drug or therapy within 28 days of baseline.
5. Known hypersensitivity to thalidomide or melphalan.
6. The development of erythema nodosum is characterized by a desquamating rash while taking thalidomide or similar drugs.
7. Any prior use of lenalidomide.
8. Concurrent use of other anti-cancer agents or treatments.
9. Known positive for HIV or infectious hepatitis, types A, B or C.
10. Must not have a diagnosis of AML (> 20% blasts) or other progressive malignant disease
11. Must not have received treatment with, erythropoietin, or granulocyte colony-stimulating factors within seven days of study initiation (21 days for pegfilgrastim or Aranesp). Note: use of corticosteroids (topical and inhaled) is permitted and prophylactic steroids are allowed for transfusion reactions, but ongoing oral corticosteroids are not permitted.
12. Serious or non-healing wound, ulcer, or bone fracture.
13. History of abdominal fistula, gastrointestinal perforation, or intra-abdominal abscess within 28 days of treatment.
14. Any history of cerebrovascular accident (CVA) or transient ischemic attack within 12 months prior to study entry.
15. Histories of myocardial infarction, cardiac arrhythmia, stable/unstable angina, symptomatic congestive heart failure, or coronary/peripheral artery bypass graft or stenting within 12 months prior to study entry.
16. History of pulmonary embolism within the past 12 months.