Auer rods are needle shaped azurophilic intracytoplasmic inclusion bodies described by John Auer in 1906. They are 0.1-2μ wide and 3-6μ long and are formed by fusion of lysosomes. They contain peroxidase and lysosomal enzymes. They are seen in acute leukaemia (myeloblastic, promyelocytic, monomyelocytic and monocytic), myelodysplastic syndromes (RAEB-2) and chronic monomyeloid leukemia. Myelodysplastic syndromes, according to the WHO classification are disorders cytopenias and <20% blasts in the bone marrow. Patients with 10-19% blasts are classified as RAEB–2. Documenting Auer rods is important in examination of bone marrow smears of patients suspected to have MDS as a patient is classified as RAEB-2 even with <10% blast if Auer rods are present. Of the Romanovsky stains there are reports of Leishman’s stain being suboptimal for staining for Auer rods. The prognosis of patients with myelodysplastic syndromes worsens with increasing blasts. Patients with Auer rods have a worse prognosis than similar patients without Auer rods (Am J Clin Pathol 124:191; 2005). A lymphoid leukaemia can be excluded in patients with Auer rods.