Myelodysplastic syndrome (MDS) with deletion 5q (del(5q)) is a distinct clinical and pathological disease subset that is exquisitely sensitive to lenalidomide for the treatment of red blood cell transfusion-dependent anemia. Although lenalidomide has erythropoeitic promoting activity in MDS without del(5q) (non-del(5q) MDS), the frequency of response to treatment is lower and relates to biologically separate drug effects. In del(5q) MDS, lenalidomide suppresses the malignant clone to restore effective erythropoiesis by virtue of synthetic lethality, arising from cereblon-dependent degradation of haplodeficient proteins encoded within the commonly deleted region of the chromosome 5q deletion. In contrast, in non-del(5q) MDS, lenalidomide restores effective erythropoiesis via enhancement of erythropoietin (EPO) receptor-initiated transcriptional response arising from the assembly of signaling-competent receptor complexes within membrane lipid raft domains. Recently, large phase III clinical studies have explored the role of lenalidomide, alone and in combination with, erythropoiesis-stimulating agents showing additive improvement in erythroid responses. Herein, we will describe the mechanisms of lenalidomide action in MDS and pivotal clinical studies testing the benefit of lenalidomide in both del(5q) and non-del(5q) MDS. Furthermore, we discuss evidence-based strategies to incorporate lenalidomide into the treatment algorithm for patients with MDS.