Mesenchymal niche cells may drive tissue failure and malignant transformation in the hematopoietic system, but the underlying molecular mechanisms and relevance to human disease remain poorly defined. Here, we show that perturbation of mesenchymal cells in a mouse model of the pre-leukemic disorder Shwachman-Diamond syndrome (SDS) induces mitochondrial dysfunction, oxidative stress, and activation of DNA damage responses in hematopoietic stem and progenitor cells. Massive parallel RNA sequencing of highly purified mesenchymal cells in the SDS mouse model and a range of human pre-leukemic syndromes identified p53-S100A8/9-TLR inflammatory signaling as a common driving mechanism of genotoxic stress. Transcriptional activation of this signaling axis in the mesenchymal niche predicted leukemic evolution and progression-free survival in myelodysplastic syndrome (MDS), the principal leukemia predisposition syndrome. Collectively, our findings identify mesenchymal niche-induced genotoxic stress in heterotypic stem and progenitor cells through inflammatory signaling as a targetable determinant of disease outcome in human pre-leukemia. Display omitted •Mesenchymal deletion of Sbds in mice recapitulates bone defects in SDS•Mesenchymal niche cells induce genotoxic stress in HSPCs in this model•p53-S100A8/9-TLR4 signaling, activated in SDS and MDS, drives these phenotypes•Mesenchymal S100A8/9 predicts leukemic evolution and disease outcome in human MDS Cell-extrinsic factors driving malignant transformation remain understudied. In a mouse model of pre-leukemia, Zambetti and colleagues establish a concept of mesenchymal niche-induced genotoxic stress in hematopoietic stem cells through p53-S100A8/9-TLR4 signaling, with relevance to human leukemia. The findings provide conceptual and mechanistic insights into the link between inflammation and cancer.