Item 1.01 Entry into a Material Definitive Agreement.

On March 10, 2008, Aastrom Biosciences, Inc. (the "Company") entered into an Amendment to Employment Agreement (the "Amendment") with Gerald D. Brennan, Jr., an employee of the Company and its former Vice President, Administrative & Financial Operations and Chief Financial Officer. The Amendment provides that Mr. Brennan’s employment will terminate on July 15, 2008 (the "Termination Date") and that, from February 11, 2008 until the Termination Date, he will provide services as reasonably requested by the Chief Executive Officer, including but not limited to the transitioning of activities previously performed by him. The Amendment also provides that, for the two and a half months following the Termination Date (the "Consulting Period"), Mr. Brennan will serve in a consulting role to the Company, performing services agreed upon including those with respect to which he was involved prior to the Termination Date. During the Consulting Period, Mr. Brennan will receive compensation based on his annual salary rate at the Termination Date.

The Amendment also provides that if Mr. Brennan is terminated without cause by the Company prior to the Termination Date, the Consulting Period will begin immediately upon such termination. If Mr. Brennan is terminated for cause, resigns, dies or becomes disabled, he will only receive compensation through the date of such termination, resignation, death or disability and the Consulting Period will not commence.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The information provided in Item 1.01 is incorporated by reference into this Item 5.02.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit Index