Monosomy 7 and deletion of 7q, known as del (7q), are common clonal cytogenetic abnormalities associated with high-grade myelodysplastic syndrome (MDS) arising in inherited and acquired bone marrow failure. Current nontransplant approaches to treat marrow failure may be complicated by stimulation of clonal outgrowth. To study the biological consequences of del (7q) within the context of a failing marrow, we generated induced pluripotent stem cells (iPSCs) derived from patients with Shwachman-Diamond syndrome (SDS), a bone marrow failure disorder with MDS predisposition, and genomically engineered a 7q deletion. The TGF-β pathway was the top differentially regulated pathway in transcriptomic analysis of SDS versus SDSdel (7q) iPSCs. SMAD2 phosphorylation was increased in SDS relative to wild-type cells, consistent with hyperactivation of the TGF-β pathway in SDS. Phospho-SMAD2 levels were reduced following 7q deletion in SDS cells and increased upon restoration of 7q diploidy. Inhibition of the TGF-β pathway rescued hematopoiesis in SDS iPSCs and in bone marrow hematopoietic cells from SDS patients while it had no impact on the SDSdel (7q) cells. These results identified a potential targetable vulnerability to improve hematopoiesis in an MDS predisposition syndrome and highlighted the importance of the germline context of somatic alterations to inform precision medicine approaches to therapy.