We have explored the application of fetal hematopoietic stem cell (HSC) transplants for cellular replacement in a murine model of beta-thalassemia. Liver-derived HSCs from nonthalassemic syngeneic murine fetal donors were transplanted into nonirradiated neonatal beta-thalassemic recipients. Significant erythrocyte chimerism (9-27%) was demonstrated in the majority of recipients at 1 month and remained stable or increased (up to 55%) during long-term follow-up in almost all cases. Chimeras had improved phenotypes, as evidenced by decreased reticulocyte counts, increased mean erythrocyte deformability, and decreased iron deposits in comparison to controls. To investigate whether the high degree of peripheral blood chimerism was predominantly a feature of erythroid elements or was a general feature of all hematopoietic elements, chimeras were created using donor HSCs "tagged" with a DNA transgene. Whereas donor hemoglobin comprised > 30% of total hemoglobin, nucleated tagged nonerythroid donor cells comprised < 1% of peripheral blood elements. Explanations for the observed selective increase in erythroid chimerism include longer survival of normal donor red cells compared to that of thalassemic red cells and the effective maturation of the donor erythroid elements in the bone marrow in chimeric animals. The latter explanation bears consideration because it is consistent with the process of ineffective erythropoiesis, well documented to occur in thalassemia, in which the majority of thalassemic erythroid cells are destroyed during erythropoiesis prior to release from the bone marrow. Overall, these data demonstrate the potential for significant erythroid chimerism and suggest that fetal HSC transplantation may play a significant role in future treatment.