Traditional response criteria in MDS and AML are based on bone marrow morphology and may not accurately reflect clonal tumor burden in patients treated with non-cytotoxic chemotherapy. We used next-generation sequencing of serial bone marrow samples to monitor MDS and AML tumor burden during treatment with epigenetic therapy (decitabine and panobinostat). Serial bone marrow samples (and skin as a source of normal DNA) from 25 MDS and AML patients were sequenced (exome or 285 gene panel). We observed that responders, including those in complete remission (CR), can have persistent measurable tumor burden (i.e., mutations) for at least one year without disease progression. Using an ultra-sensitive sequencing approach, we detected extremely rare mutations (equivalent to 1 heterozygous mutant cell in 2000 non-mutant cells) months to years prior to their expansion at disease relapse. While patients can live with persistent clonal hematopoiesis in a CR or stable disease, ultimately we find evidence that expansion of a rare subclone occurs at relapse or progression. Here we demonstrate that sequencing of serial samples provides an alternative measure of tumor burden in MDS or AML patients and augments traditional response criteria that rely on bone marrow blast percentage.