Recently, NOD-SCID IL2Rγ-/-(NSG) mice were implanted with human mesenchymal stromal cells (MSCs) in the presence of ceramic scaffolds or Matrigel to mimic the human bone marrow (BM) microenvironment. This approach allowed the engraftment of leukemic samples that failed to engraft in NSG mice without humanized niches and resulted in a better preservation of leukemic stem cell self-renewal properties. To further improve our humanized niche scaffold model, we genetically engineered human MSCs to secrete human interleukin-3 (IL-3) and thrombopoietin (TPO). In vitro, these IL-3- and TPO-producing MSCs were superior in expanding human cord blood (CB) CD34+hematopoietic stem/progenitor cells. MLL-AF9-transduced CB CD34+cells could be transformed efficiently along myeloid or lymphoid lineages on IL-3- and TPO-producing MSCs. In vivo, these genetically engineered MSCs maintained their ability to differentiate into bone, adipocytes, and other stromal components. Upon transplantation of MLL-AF9-transduced CB CD34+cells, acute myeloid leukemia (AML) and acute lymphoblastic leukemia (ALL) developed in engineered scaffolds, in which a significantly higher percentage of myeloid clones was observed in the mouse compartments compared with previous models. Engraftment of primary AML, B-cell ALL, and biphenotypic acute leukemia (BAL) patient samples was also evaluated, and all patient samples could engraft efficiently; the myeloid compartment of the BAL samples was better preserved in the human cytokine scaffold model. In conclusion, we show that we can genetically engineer the ectopic human BM microenvironment in a humanized scaffold xenograft model. This approach will be useful for functional study of the importance of niche factors in normal and malignant human hematopoiesis.