The substantial understanding that has been gained over the past 5 decades of the biology of blood formation is largely due to the development of functional quantitative assays for cells at all stages of differentiation, from multipotential stem cells to mature cells. The majority of studies have involved the mouse because the ease with which repopulation studies can be carried out with this animal model allows the assay of complete lineage development from stem cells. In the past decade, advances in repopulation assays for human stem cells using xenotransplantation have greatly enhanced our understanding of human stem cell biology. Importantly, the xenotransplantation methodology has also been used to identify the cancer stem cell that initiates and sustains leukemic proliferation, providing key evidence for the cancer stem cell hypothesis. This hypothesis argues that cancer cells are functionally heterogeneous and hierarchically organized such that only specific cells are capable of sustaining tumor growth and continuously producing the cells that make up the bulk of the tumor. Recent studies have also brought into focus the importance of the intimate relationship between the stem cell (normal or leukemic) and its microenvironment. Coming into view are the molecular players involved in stem cell homing, migration, and adhesion, as well as the cellular components of the microenvironmental niche. Here we review recent studies that have begun, to elucidate the interplay between normal and leukemic human stem cells and their microenvironment.