Hematopoietic stem cell (HSC) transplantation (HSCT) can offer a curative treatment for a wide range of diseases including genetic blood disorders, autoimmune diseases and hematologic malignancies, and it can also induce immune-tolerance for organ or cell transplantation. However there are still significant barriers to the broad clinical application of HSCT: 1. Currently, HSCT relies on human donors, as the methods for generating mature, fully functional HSCs from human pluripotent stem cells (hPSC) in vitro are still lacking; 2. The toxicity of conditioning regimens drastically limits the patient populations that are being offered HSCT. Here, we report significant progress towards removing these barriers: 1. Based on our knowledge of the developmental biology of HSCs, we improved the protocols for generating HSC in vitro from hPSC; 2. We developed an antibody-based conditioning method to eliminate endogenous HSC so that donor HSCs can engraft into the vacated niches in the bone marrow, and to transiently suppress immune T and NK cells to prevent rejection of donor HSCs. This is a major accomplishment, as it suggests that we can safely deplete endogenous HSC and transplant donor HSC to achieve high and stable long-term engraftment and reconstitution of the blood and immune systems without chemotherapy or radiation. Using this method, we were able to transplant purified HSCs from a completely mis-matched donor. The engrafted HSC induced transplantation tolerance to organs from the same donor, but not to a genetically different donor. This implies that in the future, when PSC-derived HSCs are available for transplantation, fewer lines will be sufficient to offer this therapy to a wide and genetically diverse patient population. Induction of transplantation tolerance by the engrafted HSCs has far reaching implication in regenerative medicine, as it will enable co-transplantation of HSCs and any other organ or cell-based therapies from the same donor or hPSC line.