Anemia is characteristic of myelodysplastic syndromes (MDS). The mechanisms of anemia in MDS are unclear. Using a mouse genetic approach, here we show that dual deficiency of mDia1 and miR-146a, encoded on chromosome 5q and commonly deleted in MDS (del(5q) MDS), causes an age-related anemia and ineffective erythropoiesis mimicking human MDS. We demonstrate that the ageing bone marrow microenvironment is important for the development of ineffective erythropoiesis in these mice. Damage-associated molecular pattern molecules (DAMPs), whose levels increase in ageing bone marrow, induced TNFα and IL-6 upregulation in myeloid-derived suppressor cells (MDSCs) in mDia1/miR-146a double knockout mice. Mechanistically, we reveal that pathologic levels of TNFα and IL-6 inhibit erythroid colony formation and differentially affect terminal erythropoiesis through reactive oxygen species-induced caspase-3 activation and apoptosis. Treatment of the mDia1/miR-146a double knockout mice with all-trans retinoic acid, which promoted the differentiation of MDSCs and ameliorated the inflammatory bone marrow microenvironment, significantly rescued anemia and ineffective erythropoiesis. Our study underscores the dual roles of the ageing microenvironment and genetic abnormalities in the pathogenesis of ineffective erythropoiesis in del(5q) MDS.