The bone marrow (BM) microenvironment regulates survival and maintenance of normal hematopoietic stem cells. Within the endosteal niche, hypoxia has an essential role in maintenance of the primitive quiescent hematopoietic stem cell. We and others have demonstrated that in the context of hematologic malignancies the BM is highly hypoxic, and that progression of the disease is associated with expansion of hypoxic niches and stabilization of the oncogenic HIF-1α. This review will provide an overview of the normal and leukemic BM microenvironment with a special emphasis on pathological hypoxia including the development of hypoxia-activated prodrugs and their applicability in hematological malignancies.