In hematological malignancies, there are dynamic interactions between leukemic cells and cells of the bone marrow microenvironment. Specific niches within the bone marrow microenvironment provide a sanctuary for subpopulations of leukemic cells to evade chemotherapy-induced death and allow acquisition of a drug-resistant phenotype. This review focuses on molecular and cellular biology of the normal hematopoietic stem cell and the leukemia stem cell niche, and of the molecular pathways critical for microenvironment/leukemia interactions. The key emerging therapeutic targets include chemokine receptors (CXCR4), adhesion molecules (VLA4 and CD44), and hypoxia-related proteins HIF-1alpha and VEGF. Finally, the genetic and epigenetic abnormalities of leukemia-associated stroma will be discussed. This complex interplay provides a rationale for appropriately tailored molecular therapies targeting not only leukemic cells but also their microenvironment to ensure improved outcomes in leukemia.