Research in the last decade has shown that hematopoietic stem cells (HSCs) interact with and are modulated by a complex multicellular microenvironment in the bone marrow, which includes both the HSC progeny and multiple non-hematopoietic cell types. Intense work is gradually throwing light on the composition of the HSC niche and the molecular cues exchanged between its components, which has implications for HSC production, maintenance and expansion. In addition, it has become apparent that bidirectional interactions between leukemic cells and their niche play a previously unrecognized role in the initiation and development of hematological malignancies. Consequently, targeting of the malignant niche holds considerable promise for more specific antileukemic therapies. Here we summarize the latest insights into HSC niche biology and recent work showing multiple connections between hematological malignancy and alterations in the bone marrow microenvironment.