We review the development of the hematopoietic system, focusing on the transition from hematopoietic stem cells (HSCs) to T cells. This includes the isolation of HSCs, and recent progress in understanding their ontogeny, homing properties, and differentiation. HSC transplantation is reviewed, including the kinetics of reconstitution, engraftment across histocompatibility barriers, the facilitation of allogeneic engraftment, and the mechanisms of graft rejection. We describe progress in understanding T-cell development in the bone marrow and thymus as well as the establishment of lymph nodes. Finally, the role of bcl-2 in regulating homeostasis in the hematopoietic system is discussed.