The predominant outgrowth of malignant cells over their normal counterparts in a given tissue is a shared feature for all types of cancer. However, the impact of a cancer environment on normal tissue stem and progenitor cells has not been thoroughly investigated. We began to address this important issue by studying the kinetics and functions of hematopoietic stem and progenitor cells in mice with Notch1-induced leukemia. Although hematopoiesis was progressively suppressed during leukemia development, the leukemic environment imposed distinct effects on hematopoietic stem and progenitor cells, thereby resulting in different outcomes. The normal hematopoietic stem cells in leukemic mice were kept in a more quiescent state but remained highly functional on transplantation to nonleukemic recipients. In contrast, the normal hematopoietic progenitor cells in leukemic mice demonstrated accelerated proliferation and exhaustion. Subsequent analyses on multiple cell-cycle parameters and known regulators (such as p21, p27, and p18) further support this paradigm. Therefore, our current study provides definitive evidence and plausible underlying mechanisms for hematopoietic disruption but reversible inhibition of normal hematopoietic stem cells in a leukemic environment. It may also have important implications for cancer prevention and treatment in general.