Hematopoietic progenitor cells require support from bone marrow mesenchymal cells. We established immortal bone marrow-derived mesenchymal cell clones by enforced expression of human telomerase reverse transcriptase. These clones consist of undifferentiated mesenchymal cells which can differentiate into osteoblasts and other mesenchymal cell lineages, and are heterogeneous in their capacity to support normal hematopoiesis and leukemic cell growth. To identify genes whose expression might be associated with the capacity of mesenchymal cells to support hematopoiesis, we compared gene expression in five supportive clones and two nonsupportive clones using the Affymetrix U133A GeneChip. For 158 genes, the average difference in expression between supportive and nonsupportive clones was at least 3-fold; no differences (<2-fold change) were detected in the expression of known hematopoietic growth factors produced by mesenchymal cells. Among the biological processes analyzed, “cell metabolism” was the most significantly enriched within the differentially expressed probe sets. In this category, 3-phosphoglycerate dehydrogenase (PHGDH), which catalyzes the first step in the biosynthesis of L-serine, was of particular interest because of its critical role in the mechanism by which glial cells support the growth and differentiation of neurons. Overexpression of PHGDH in supportive clones was validated by semiquantitative RT-PCR and Western blotting. PHGDH expression was also detectable in primary bone marrow-derived mesenchymal cells. We used stable RNA interference (RNAi) to specifically reduce PHGDH expression in supportive mesenchymal cells; L-serine production by mesenchymal cells with RNAi-downregulated PHGDH expression was nearly abrogated. Downregulation of PHGDH by RNAi markedly reduced recovery of hematopoietic cells in cultures initiated by cord blood CD34+ cells, as well as cobblestone formation and long-term culture-initiating cell capacity (P <0.001 for all assays). PHGDH dowredulation also significantly reduced the capacity of mesenchymal cells to support primary leukemic cells obtained from 5 patients with acute lymphoblastic leukemia (P <0.001). Importantly, PHGDH RNAi induced only minimal changes in mesenchymal cell gene expression and no changes (<2-fold difference) were detected in the expression of hematopoietic growth factors or other molecules previously linked to hematopoiesis. The requirement of hematopoietic cells for exogenous L-serine may depend on low or absent PHGDH expression, as suggested for neurons. In tests of this prediction, we found that PHGDH expression was undetectable in most primary leukemia samples tested (n = 10) and was weak in normal cord blood CD34+ cells (n = 2), including CD34+ CD38— cells. Finally, in cultures of primary leukemic cells from two patients performed on mesenchymal cells with downregulated PHGDH expression in medium lacking L-serine, exogenous L-serine, at concentrations similar to those previously shown to promote neural cell growth improved cell recovery, corroborating the trophic function of L-serine for hematopoietic cells. In conclusion, our study shows that the “nonessential” amino acid L-serine, produced and released by mesenchymal cells, serves as a trophic factor for normal and leukemic hematopoietic progenitors. These results suggest a novel mechanism by which cells in the bone marrow microenvironment could contribute to the survival, proliferation and differentiation of hematopoietic progenitors.