Hematology research is critically dependent on disease models. Genetically engineered murine strains, as well as marrow transplant models, have provided important insights into disease mechanisms across the spectrum from leukemia to non-malignant genetic disorders. Murine model systems proved the culpability of the BCR/ABL oncoprotein in chronic myeloid leukemia and established the principle that autologous, rejection-proof pluripotent stem cells can be harnessed to treat genetic blood disease by combining gene repair with cell therapy. Where murine models prove limited, genetically modified human embryonic stem cells and personalized induced pluripotent stem (iPS) cells derived from patients by somatic cell reprogramming are emerging as powerful platforms for illuminating disease mechanisms and developing novel therapeutics. Although promising, the path to date has been fraught with obstacles - political, scientific, and clinical - and critical challenges lie ahead.