Lithium is commonly used in psychiatry for mood stabilization. Lithium treatment results in neutrophilia, increased platelets and increased circulating CD34+ haematopoietic stem cells, HSC. This paper outlines the newly discovered mechanism by which this occurs. Glycogen synthase kinase-3, GSK-3, phosphorylates and thereby inactivates hypoxia-induced factor-1, HIF-1. HIF-1 is a transcription factor triggering transcription of multiple genes related to adaptation to hypoxia, among which is CXCL12. CXCL12 forms the primary homing gradient for CD34+ HSCs towards the hypoxic, trophic bone marrow niche to which they must go to thrive. Lithium inhibits GSK-3 thereby increasing active HIF-1 that results in a stronger CXCL12 homing gradient. Trophic niche function is enhanced, ultimately resulting in increased production of neutrophils, platelets and CD34+ cells. Sitagliptin is a new drug to treat diabetes that coincidentally inhibits destruction of CXCL12. Thus, lithium and sitagliptin enhance CXCL12 by different paths, potentially increasing trophic niche function. Awareness of this path is important in HSC transplantation.