Hematopoietic stem cell transplantation (HCT) utilizing non-myeloablative (NMA) and reduced-intensity conditioning (RIC) regimens (collectively referred to as reduced-toxicity HCT, RT-HCT) has become a viable therapeutic option for patients with hematological malignancies who are ineligible for standard myeloablative conditioning transplantation (MA-HCT). RT-HCT has been shown to induce stable engraftment with low toxicity, and to produce similar overall and progression-free survival (PFS) when compared to MA-HCT in acute myeloid leukemia and myelodysplastic syndrome. The best results for RT-HCT have been reported for patients with disease that is in remission, indolent and chemosensitive, and with a strong graft-versus-malignancy effect. Chronic graft-versus-host disease seems to correlate with a lower relapse rate and better PFS. RT-HCT is inferior when performed in poor risk or advanced disease, due to high relapse rates. A search for novel strategies that includes the most appropriate conditioning regimens and post-transplant immunomodulation protocols with more intensive anti-malignancy activity but limited toxicity is in progress. This review provides an update on the results of clinical studies of RT-HCT, and discusses possible indications and investigative strategies for improving the clinical outcomes of RT-HCT for the major hematological malignancies.