We have compared the outcomes of 87 patients with acute myelogenous leukemia (AML) and myelodysplasia (MDS) receiving matched sibling transplants with stem cells from peripheral blood (blood cell transplant, BCT) or bone marrow (BMT). In good risk patients (AML in CR1) granulocytes recovered to 0.5 x 10(9)/l a median of 14 days after BCT compared with 19 days after BMT (P < 0.0001). For patients with poor risk disease (AML beyond CR1 and MDS) corresponding figures were 16 vs 26 days (P < 0.0001). Platelet recovery to 20 x 10(9)/l was also faster after BCT (good risk 12 vs 20 days, P < 0.0001; poor risk 17 vs 22 days, P = 0.04). Red cell transfusions were unaffected by cell source, but BCT recipients required less platelet transfusions (good risk 1 vs 5, P = 0.002; poor risk 5 vs 11, P = 0.004). Blood cell transplants resulted in more chronic GVHD (86% vs 48%, P = 0.005) and a significantly higher proportion of recipients with KPS of 80% or less (48% vs 5%, P = 0.004). Disease-free survival at 4 years was 23% for both groups of poor risk patients but outcome in good risk patients was better after BCT (93% vs 62%, P = 0.047) related mainly to less relapse. While disease-free survival may be better after BCT than BMT for AML in CR1, quality of life may be relatively impaired.