In utero hematopoietic stem cell transplantation (IUHCT) is a potential therapeutic alternative to postnatal hematopoietic stem cell transplantation (HSCT) for congenital hematologic disorders that can be diagnosed early in gestation and can be cured by HSCT. The rationale is to take advantage of normal events during hematopoietic and immunologic ontogeny to facilitate allogeneic hematopoietic engraftment. Although the rationale remains compelling, IUHCT has not yet achieved its clinical potential. Achieving therapeutic levels of engraftment by IUHCT alone remains challenging. However, considerable experimental progress has been made toward the clinical strategy of using IUHCT to induce donor-specific tolerance to facilitate a relatively nontoxic postnatal HSCT. Because donor specific tolerance induction requires relatively minimal engraftment, this strategy may hold the key to broad clinical application of IUHCT in the near future.