Aplastic anaemia seems to be predominantly a defect of the stem cell rather than the stroma, though abnormalities of the microenvironment may co-exist. There is highly suggestive evidence that the stem cell is the target of an immune attack, though the main evidence remains the response to immunosuppression with antilymphocyte globulin and cyclosporin. The stem cell defect remains even after recovery of the peripheral blood counts and the AA marrow is a fertile environment for the emergence of abnormal clones, particularly PNH. However, it has recently become apparent that there is an overlap with the myelodysplastic syndromes and clones of monosomy 7 and trisomy 8 amongst others are not uncommon in aplastic anaemia. Recent work has suggested that the emergence of a clone of monosomy 7 cells carries a poor prognosis, whereas trisomy 8 has a good prognosis particularly in response to cyclosporin. However, the setting in which monosomy 7 arises may affect the phenotypic expression. The immune targeting of stem cells may be associated with increased apoptosis in aplastic anaemia, in part mediated by fas expression, but not exclusively. Understanding the pathophysiology of AA should help to improve and perhaps target therapy.