In the past several decades, great progress has been made in our understanding of normal hematopoiesis and its malignant transformation. This article provides a comprehensive and up-to-date review of pathogenesis of leukemia and lymphoma, with an emphasis on early molecular events. Current concepts of normal hematopoiesis and its key regulatory processes are summarized. Various environmental and infectious factors that play a causative role in hematopoietic malignancies are described. In particular, several causative viruses, i.e. HTLV1, HHV8 and EBV, are discussed in depth. Numerous genetic abnormalities have been identified in leukemia and lymphoma, including chromosomal translocations, gene deletions, amplifications, and point mutations. Synopses are included for the most frequently encountered aberrations, and their relation to normal and malignant hematopoiesis, disease classification and prognosis. Major molecular mechanisms and signal transduction pathways involved in the leukemogenesis are depicted; these include blockage of differentiation, self-sustainable proliferation, abnormal cell cycle progression and impaired apoptosis. Also included are the recently discovered microRNAs, and their potential role in the pathogenesis of leukemia and lymphoma. Future directions in leukemia and lymphoma research are presented, including several modern molecular technologies and their importance in developing new biomarkers for early detection of leukemia and lymphoma.