Aplastic anemia, an unusual hematologic disease, is the paradigm of the human bone marrow failure syndromes. Almost universally fatal just a few decades ago, aplastic anemia can now be cured or ameliorated by stem-cell transplantation or immunosuppressive drug therapy. The pathophysiology is immune mediated in most cases, with activated type 1 cytotoxic T cells implicated. The molecular basis of the aberrant immune response and deficiencies in hematopoietic cells is now being defined genetically; examples are telomere repair gene mutations in the target cells and dysregulated T-cell activation pathways. Immunosuppression with antithymocyte globulins and cyclosporine is effective at restoring blood-cell production in the majority of patients, but relapse and especially evolution of clonal hematologic diseases remain problematic. Allogeneic stem-cell transplant from histocompatible sibling donors is curative in the great majority of young patients with severe aplastic anemia; the major challenges are extending the benefits of transplantation to patients who are older or who lack family donors. Recent results with alternative sources of stem cells and a variety of conditioning regimens to achieve their engraftment have been promising, with survival in small pediatric case series rivaling conventional transplantation results.