Myelodysplastic syndrome (MDS) is a heterogeneous, clonal hematological disorder characterized by ineffective hematopoiesis, cytopenia, morphologic dysplasia, and predisposition to acute myeloid leukemia (AML). Stem cell genomic instability, microenvironmental aberrations, and somatic mutations contribute to leukemic transformation. The hypomethylating agents (HMAs), azacitidine and decitabine are the standard of care for patients with higher-risk MDS. Although these agents induce responses in up to 40–60% of patients, primary or secondary drug resistance is relatively common. To improve the treatment outcome, combinational therapies comprising HMA with targeted therapy or immunotherapy are being evaluated and are under continuous development. This review provides a comprehensive update of the molecular pathogenesis and immune-dysregulations involved in MDS, mechanisms of resistance to HMA, and strategies to overcome HMA resistance.