Following a course of busulfan, mice sustain a residual injury to the marrow which is characterized by prolonged or permanent mild marrow hypoplasia and which frequently terminates in severe marrow aplasia and death. The stem cells and the marrow environment of mice bearing this residual injury were studied by assessing the ability of cells from these mice to grow when transplanted into irradiated normal hosts and by assessing the ability of normal cells to correct the residual injury when transplanted into mice previously treated with busulfan. Stem cells from busulfan treated mice grew poorly, both in the tibial and splenic environment of normal recipients. Normal cells transplanted into busulfan treated mice corrected most of the lesion in that they restored the number of granulocytic progenitor cells to normal, the number of pluripotential stem cells to, or almost to, normal; but they were unable to restore completely the number of more differentiated, nucleated marrow cells. Thus, the major factor in residual lesions produced in mice by busulfan is a lesion of the stem cell itself, but an additional minor factor may be a lesion of the marrow environment.