Erythrophagocytosis by neutrophils is a rare phenomenon in myeloid malignancies, and its clinicopathologic significance is not fully understood. We report a unique case of erythrophagocytosis by dysplastic neutrophils in chronic myelomonocytic leukemia (CMML) and subsequent transformation to acute myeloid leukemia (AML). Review of multiple marrow samples, both pretreatment and post-treatment, demonstrated a correlation between percentage of dysplastic neutrophils and degree of erythrophagocytosis. Erythrophagocytosis was observed only in dysplastic forms of neutrophils. Post-transplant marrows with engraftment of donor cells showed no neutrophilic dysplasia or erythrophagocytosis. Possible mechanisms of neutrophilic erythrophagocytosis in myeloid malignancies are discussed.