Stem-cell niche refers to a microenvironment, within the specific anatomic location where stem cells are found, which interacts with stem cells to regulate cell fate. The word 'niche' can be in reference to the in vivo or in vitro stem-cell microenvironment. During embryonic development, various niche factors act on embryonic stem cells to alter gene expression, and induce their proliferation or differentiation for the development of the fetus. Within the human body, stem-cell niches maintain adult stem cells in a quiescent state, but after tissue injury, the surrounding micro-environment actively signals to stem cells to promote either self-renewal or differentiation to form new tissues. Several factors are important to regulate stem-cell characteristics within the niche: cell–cell interactions between stem cells, as well as interactions between stem cells and neighbouring differentiated cells, interactions between stem cells and adhesion molecules, extracellular matrix components, the oxygen tension, growth factors, cytokines, and the physicochemical nature of the environment including the pH, ionic strength (e.g. Ca2+ concentration) and metabolites, like ATP, are also important. The stem cells and niche may induce each other during development and reciprocally signal to maintain each other during adulthood.

Scientists are studying the various components of the niche and trying to replicate the in vivo niche conditions in vitro. This is because for regenerative therapies, cell proliferation and differentiation must be controlled in flasks or plates, so that sufficient quantity of the proper cell type are produced prior to being introduced back into the patient for therapy.

Human embryonic stem cells are often grown in fibroblastic growth factor-2 containing, fetal bovine serum supplemented media. They are grown on a feeder layer of cells, which is believed to be supportive in maintaining the pluripotent characteristics of embryonic stem cells. However, even these conditions may not truly mimic in vivo niche conditions.

Adult stem cells remain in an undifferentiated state throughout adult life. However, when they are cultured in vitro, they often undergo an 'aging' process in which their morphology is changed and their proliferative capacity is decreased. It is believed that correct culturing conditions of adult stem cells needs to be improved so that adult stem cells can maintain their stemness over time.

A Nature Insight review defines niche as follows:

"Stem-cell populations are established in 'niches' — specific anatomic locations that regulate how they participate in tissue generation, maintenance and repair. The niche saves stem cells from depletion, while protecting the host from over-exuberant stem-cell proliferation. It constitutes a basic unit of tissue physiology, integrating signals that mediate the balanced response of stem cells to the needs of organisms. Yet the niche may also induce pathologies by imposing aberrant function on stem cells or other targets. The interplay between stem cells and their niche creates the dynamic system necessary for sustaining tissues, and for the ultimate design of stem-cell therapeutics ... The simple location of stem cells is not sufficient to define a niche. The niche must have both anatomic and functional dimensions."