Chromosomal instability is a prominent biological feature of myelodysplastic syndromes (MDS), with over 50% of patients with MDS harboring chromosomal abnormalities or a complex karyotype (CK). Despite this observation, the mechanisms underlying mitotic and chromosomal defects in MDS remain elusive. In this study, we identified ectopic expression of the transcription factor ONECUT3, which is associated with CKs and poorer survival outcomes in MDS. ONECUT3-overexpressing cell models exhibited enrichment of several notable pathways, including signatures of sister chromosome exchange separation and mitotic nuclear division with the upregulation of INCENP and CDCA8 genes. Notably, dysregulation of chromosome passenger complex (CPC) accumulation, besides the cell equator and midbody, during mitotic phases consequently caused cytokinesis failure and defective chromosome segregation. Mechanistically, the homeobox (HOX) domain of ONECUT3, serving as the DNA binding domain, occupied the unique genomic regions of INCENP and CDCA8 and transcriptionally activated these 2 genes. We identified a lead compound, C5484617, that functionally targeted the HOX domain of ONECUT3, inhibiting its transcriptional activity on downstream genes, and synergistically resensitized MDS cells to hypomethylating agents. This study revealed that ONECUT3 promoted chromosomal instability by transcriptional activation of INCENP and CDCA8 , suggesting potential prognostic and therapeutic roles for targeting high-risk MDS patients with a CK.