In mixed xenogeneic (rat/mouse] chimeras, in which both donor and host hematopoietic cells coexist, donor hematopoiesis eventually declines, despite apparent immunological tolerance of the host to the donor. To explain this observation, we hypothesized that donor hematopoietic cells might have a competitive disadvantage in a xenogeneic environment. Since SCID (severe combined immunodeficient) bone marrow cells (BMC) are unable to produce functional B and T lymphocytes, they might compete for myeloid but not lymphocytic reconstitution of the animals, whereas marrow from the normal congenic strain, C.B-17, would compete for repopulation of both lineages. We therefore evaluated the capacity of SCID and C.B-17 mouse marrow to inhibit repopulation by rat BMC in irradiated SCID mouse recipients. Nine weeks after administration of T-cell depleted (TCD) F344 rat BMC alone to 3 Gy-irradiated SCID mice, rat cells of both the myeloid and the lymphoid lineages were readily detectable among peripheral blood leukocytes. Rat plus SCID mouse BMC reconstitution resulted in a marked reduction in rat myeloid repopulation, without affecting rat lymphoid repopulation. Rat plus TCD normal C.B-17 mouse BMC, on the other hand, completely inhibited repopulation of all rat lineages by 9 weeks. Since mouse marrow inhibited only the repopulation by rat cells of the lineages that the mouse marrow was itself capable of generating, we conclude that physiologic factors, such as species specificity or selectivity of cytokines, adhesion molecules, and other molecules important for hematopoiesis, provide a competitive advantage to host marrow over xenogeneic hematopoietic cells. This physiologic barrier must be overcome in addition to immunologic barriers if bone marrow transplantation (BMT) is to provide a feasible approach to inducing xenograft tolerance. In addition, we describe the development of a chronic graft-vs.-host-disease (GVHD)-like syndrome in SCID mouse recipients of TCD rat marrow.