The role of stem cell transplantation in the treatment of leukemia and myelodysplasia (MDS) in children has changed over the past decade. In pediatric acute lymphoblastic leukemia (ALL), the overall cure-rate is high with conventional chemotherapy. However, selected patients with a high-risk of relapse are often treated with allogeneic hematopoietic stem cell transplantation (allo-HSCT) in first remission (CR1). Patients with a bone-marrow relapse who attain a second remission frequently receive HSCT. High minimal residual disease (MRD) levels directly prior to HSCT determines the relapse risk. Therefore, MRD positive patients are eligible for more experimental approaches such as intensified or experimental chemotherapy pre-HSCT, as well as immune modulation post-HSCT. In pediatric acute myeloid leukemia (AML) the role of allo-HSCT in CR1 is declining, due to better outcome with modern multi-agent chemotherapy. In relapsed AML patients, allo-HSCT still seems indispensable. Targeted therapy may change the role of HSCT, in particular in chronic myeloid leukemia, where the role of allografting is changing in the imatinib era. In MDS, patients are usually transplanted immediately without prior cytoreduction. New developments in HSCT, such as the role of alternative conditioning regimens, and innovative stem cell sources such as peripheral blood and cord blood, will also be addressed.