The preclinical evaluation of investigational agents for Waldenström macroglobulinemia (WM) has been limited by the lack of in vivo models that enable the use of explanted patient cells. We describe here a novel in vivo model of human WM in severe combined immunodeficient (SCID) mice implanted with human fetal bone chips (SCID-hu mice) into which WM cells from patient bone marrow are engrafted directly into the human bone marrow (huBM) microenvironment. WM cells in SCID-hu mice produced human monoclonal paraprotein (immunoglobulin M [IgM] and/or kappa or lambda chain) detectable in mice sera. Immunohistochemical analysis of human bone retrieved from SCID-hu mice showed infiltration with CD20+, IgM+, and monotypic light chain+ lymphoplasmacytic cells. Mast cells were observed to be associated with the infiltrate in these sections. Treatment of SCID-hu mice bearing WM with rituximab induced tumor regression, associated with a decrease in serum paraprotein. This model, therefore, recapitulates the in vivo biology of WM and allows the study of novel investigational drugs targeting WM cells in the huBM milieu.