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Recent discoveries have demonstrated the extraordinary plasticity of tissue-derived stem cells, raising fundamental questions about cell lineage relationships and suggesting the potential for novel cell-based therapies. We have examined this phenomenon in a potential reciprocal relationship between stem cells derived from the skeletal muscle and from the bone marrow. We have discovered that cells derived from the skeletal muscle of adult mice contain a remarkable capacity for hematopoietic differentiation. Cells prepared from muscle by enzymatic digestion and 5 day in vitro culture were harvested and introduced into each of six lethally irradiated recipients together with distinguishable whole bone marrow cells. Six and twelve weeks later, all recipients showed high-level engraftment of muscle-derived cells representing all major adult blood lineages. The mean total contribution of muscle cell progeny to peripheral blood was 56%, indicating that the cultured muscle cells generated approximately 10- to 14-fold more hematopoietic activity than whole bone marrow. Although the identity of the muscle-derived hematopoietic stem cells is still unknown, they may be identical to muscle satellite cells, some of which lack myogenic regulators and could respond to hematopoietic signals. We have also found that stem cells in the bone marrow can contribute to cardiac muscle repair and neovascularization after ischemic injury. We transplanted highly purified bone marrow stem cells into lethally irradiated mice that subsequently were rendered ischemic by coronary artery occlusion and reperfusion. The engrafted stem cells or their progeny differentiated into cardiomyocytes and endothelial cells and contributed to the formation of functional tissue.