Allogeneic stem cell transplantation followed by targeted immune therapy with Gemtuzumab Ozogamicin (Mylotarg) will be given to patients with average risk AML or MDS.

Reduced intensity conditioning regimen of Busulfan (Bu) and Fludarabine (Flu) + Anti-Thymocyte Globulin (ATG ) (unrelated donors only) or reduced toxicity conditioning regimen of Bu/Flu/alemtuzumab, or reduced hepatic toxicity regimen of melphan/Flu/alemtuzumab and AlloSCT, followed by Gemtuzumab Ozogamicin consolidation in patients with average risk AML/MDS meeting eligibility criteria.

Inclusion Criteria:

Disease Status:

• AML 1st CR with a matched family donor
• AML 1st CR with unrelated donor
• AML 2nd CR or CRP
• MDS and < or = 5% bone marrow myeloblasts at diagnosis

Disease Immunophenotype:

• Disease must express a minimum of > or = 10% CD33 positivity for patients with AML

Organ Function:

• Adequate renal function, adequate liver function, adequate cardiac function, adequate pulmonary function

Exclusion Criteria:

• Patients with active CNS AML disease at time of preparative regimen
• Secondary MDS
• Poor cytogenetics
• Female patients who are pregnant
• Karnofsky <70% or Lansky <50% if 10 years or less
• Age >25 years
• Seropositive for HIV