Recent conceptual and technical improvements have resulted in clinically meaningful levels of gene transfer into repopulating hematopoietic stem cells. At the same time, evidence is accumulating that gene therapy may induce several kinds of unexpected side effects, based on preclinical and clinical data. To assess the therapeutic potential of genetic interventions in hematopoietic cells, it will be important to derive a classification of side effects, to obtain insights into their underlying mechanisms, and to use rigorous statistical approaches in comparing data. We here review side effects related to target cell manipulation; vector production; transgene insertion and expression; selection procedures for transgenic cells; and immune surveillance. We also address some inherent differences between hematopoiesis in the most commonly used animal model, the laboratory mouse, and in humans. It is our intention to emphasize the need for a critical and hypothesis-driven analysis of “transgene toxicology,” in order to improve safety, efficiency, and prognosis for the yet small but expanding group of patients that could benefit from gene therapy.