Childhood leukemia is the commonest form of childhood cancer and represents clonal proliferation of transformed hemopoietic cells as a result of genetic changes. Molecular characterization of these changes, in particular chromosomal translocations, has yielded a wealth of information on the mechanisms of leukemogenesis. These ®ndings have also allowed the development of sensitive assays for the identi®cation of underlying molecular defects, which is applicable to disease diagnosis and to monitor response to treatment. Genetic alterations in childhood leukemia are powerful prognostic indicators. TEL-AML1 fusion and hyperdiploidy >50 chromosomes are associated with a good prognosis in childhood acute lymphoblastic leukemia, whereas BCR-ABL fusion and MLL rearrangements are associated with a poor prognosis. Hence cytogenetic and molecular genetic classi®cation of childhood leukemia will signi®cantly improve the ability of clinicians to predict therapeutic response and prognosis, which paves the way for risk strati®cation based on clinical and genetic features. Finally, deciphering of genetic lesions in leukemia has allowed elucidation of the molecular basis of current treatment, as typi®ed by the success of all-trans retinoic treatment in acute promyelocytic leukemia, and has identi®ed targets for novel therapeutic approaches. It is envisaged that efforts in characterization of molecular defects in childhood leukemia will ultimately be translated into better clinical outcome for patients.