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A unique transient leukemia (TL) has been described in newborns with Down syndrome (DS; or trisomy 21 mosaics). This leukemia has a high incidence of spontaneous remission; however, early death and subsequent development of acute megakaryoblastic leukemia (AMKL) have been reported. We prospectively evaluated 48 infants with DS and TL to determine the natural history and biologic characteristics of this disease, identify the clinical characteristics associated with early death or subsequent leukemia, and assess the incidence of subsequent leukemia. Blast cells associated with TL in DS infants exhibited FAB M(7) morphology and phenotype. Most infants (74%) had trisomy 21 (or mosaicism) as the only cytogenetic abnormality in the blast cells. Most children were able to spontaneously clear peripheral blasts (89%), normalize blood counts (74%), and maintain a complete remission (64%). Early death occurred in 17% of infants and was significantly correlated with higher white blood cell count at diagnosis (P < .001), increased bilirubin and liver enzymes (P < .005), and a failure to normalize the blood count (P = .001). Recurrence of leukemia occurred in 19% of infants at a mean of 20 months. Development of leukemia was significantly correlated with karyotypic abnormalities in addition to trisomy 21 (P = .037). Ongoing collaborative clinical studies are needed to determine the optimal role of chemotherapy for infants at risk for increased mortality or disease recurrence and to further the knowledge of the unique biologic features of this TL.