Lifelong homeostasis of bone marrow is maintained by the resident stem cells that include the quiescent very small embryonic-like stem cells (VSELs) and lineage restricted, tissue committed 'progenitors' hematopoietic stem cells (HSCs). Niche providing mesenchymal stromal cells (MSCs) regulate the function of VSELs/HSCs by providing crucial paracrine support. Any dysfunction of stem cells and/or their niche leads to disease state. The stem cells biology gets affected with age leading to a myeloid bias in differentiation of HSCs and increased incidence of myeloid leukemia. Present study was undertaken to enumerate VSELs, HSCs and MSCs and evaluate their response on D4 and D10 after chemotherapy with 5-Fluorouracil (5-FU) in young and aged mouse bone marrow. Stem cells were activated in response to 5-FU induced stress in an attempt to restore homeostasis. Although absolute numbers of VSELs and HSCs did not differ much between young and aged mice, their tendency to proliferate was higher on D4 in aged mice. However, ability to revert back to basal numbers and their differentiation was affected on D10 in aged marrow. Stem cells from aged bone marrow showed greater ability to form CFUs on D10 after 5-FU treatment. CD44 positive aged MSCs also showed increased proliferation on D10. Transplanting MSCs from young mice in 5-FU treated aged marrow helped improve hematopoiesis. The results suggest that no significant intrinsic changes occur as proliferative ability of stem cells remains unaffected but the niche gets affected with age leading to excessive self-renewal and compromised differentiation. This may explain increased incidence of leukemia with age.