A 63-year-old male was admitted because of pneumonia. Peripheral blood findings showed pancytopenia with increase of blasts. A bone marrow specimen showed hypocellular marrow with increase of blasts. The blasts were positive for CD7, CD34, and HLA-DR and negative for other lymphoid antigens and myeloid antigens involving myeloperoxidase. Rearrangement of immunoglobulin heavy chain was demonstrated by Southern blotting analysis. T cell receptor beta, T cell receptor gamma and immunoglobulin light chain rearrangement were negative. A diagnosis of stem cell leukemia was made. In vitro, the blasts did not respond to recombinant human granulocyte colony-stimulating factor (rhG-CSF), cytarabine (Ara-C) and all-trans retinoic acid (ATRA). However, in the blasts of culture without cytokeins, CD33 expression was newly induced. Remission was not obtained by chemotherapies with cyclophosphamide, etoposide, prednisolone and Ara-C. Four months later, marrow specimens showed hypoplasty with myelofibrosis. One year later, the blasts showed CD33 expression with negative myeloperoxidase. The leukemia was transformed to minimally differentiated myeloid leukemia from stem cell leukemia. This condition was thought to be "smoldering leukemia" because of the slow development and refractoriness to chemotherapy. Nineteen months later the patient died due to respiratory failure by pneumonia and pulmonary bleeding despite therapy.