Dormant hematopoietic stem cells (HSCs) are activated by microenvironmental cues of the niche in response to the injury of bone marrow (BM). It is not clearly understood how engrafted cells respond to these cues and are involved in marrow regeneration. The purpose of this study was to decipher this cellular response in competitive environment. BM cells of CD45.2 mice were transplanted in sub-lethally irradiated CD45.1 mice. The status of the donor and recipient stem cells (LSK: Lin(-)Sca-1(+)c-Kit(+)) were determined by flowcytometry using CD45 alleles specific antibodies. The presence of long-term engraftable stem cells was confirmed by marrow repopulation assay in secondary hosts, and cell cycle status was determined by staining with Ho33342 and pyronin Y, and BrdU retention assay. The expressions of different hematopoietic growth factor genes in stromal compartment (CD45(-) cells) were assessed by real-time reverse transcriptase- polymerase chain reaction (RT-PCR). The presence of donor cells initially stimulated the proliferation of host LSK cells compared with control mice without transplantation. This was expected due to pro-mitotic and anti-apoptotic factors secreted by the donor hematopoietic cells. Upon transplantation, a majority of the donor LSK cells entered into cell cycle, and later they maintained cell cycle status similar to that in the normal mouse. Donor-derived LSK cells showed 1000-fold expansion within 15 days of transplantation. Donor-derived cells not only regenerated BM in the primary irradiated host for long-term, they were also found to be significantly involved in marrow regeneration after the second cycle of irradiation. The proliferation of LSK cells was associated with the onset of colossal expression of different hematopoietic growth factor genes in non-hematopoietic cellular compartment. Activation of donor LSK cells was found to be dynamically controlled by BM cellularity. Long-term study showed that a high level of hematopoietic reconstitution could be possible by donor cells in a sub-lethally irradiated host.