Bone marrow examination has become increasingly important for the diagnosis and treatment of hematologic and other illnesses. Morphologic evaluation of the bone marrow aspirate and biopsy has recently been supplemented by increasingly sophisticated ancillary assays, including immunocytochemistry, cytogenetic analysis, flow cytometry, and molecular assays. With our rapidly expanding knowledge of the clinical and biologic diversity of leukemia and other hematologic neoplasms, and an increasing variety of therapeutic options, the bone marrow examination has became more critical for therapeutic monitoring and planning optimal therapy. Sensitive molecular techniques, in vitro drug sensitivity testing, and a number of other special assays are available to provide valuable data to assist these endeavors. Fortunately, improvements in bone marrow aspirate and needle technology has made the procurement of adequate specimens more reliable and efficient, while the use of conscious sedation has improved patient comfort. The procurement of bone marrow specimens was reviewed in the first part of this series. This paper specifically addresses the diagnostic interpretation of bone marrow specimens and the use of ancillary techniques.