The interaction of stem cells with their bone marrow microenvironment is a critical process in maintaining normal hematopoiesis. We applied an approach to resolve the spatial organization that underlies these interactions by evaluating the distribution of hematopoietic cell subsets along an in vivo Hoechst 33342 (Ho) dye perfusion gradient. Cells isolated from different bone marrow regions according to Ho fluorescence intensity contained the highest concentration of hematopoietic stem cell (HSC) activity in the lowest end of the Ho gradient (i.e., in the regions reflecting diminished perfusion). Consistent with the ability of Ho perfusion to simulate the level of oxygenation, bone marrow fractions separately enriched for HSCs were found to be the most positive for the binding of the hypoxic marker pimonidazole. Moreover, the in vivo administration of the hypoxic cytotoxic agent tirapazamine exhibited selective toxicity to the primitive stem cell subset. These data collectively indicate that HSCs and the supporting cells of the stem cell niche are predominantly located at the lowest end of an oxygen gradient in the bone marrow with the implication that regionally defined hypoxia plays a fundamental role in regulating stem cell function.