Allogeneic hematopoietic stem cell (HSC) transplantation (HSCT) is currently the leading strategy to manage acute myeloid leukemia (AML). However, treatment-related morbidity limits the patient generalizability of HSCT use, and the survival of leukemic stem cells (LSCs) within protective areas of the bone marrow (BM) continues to lead to high relapse rates. Despite growing appreciation for the significance of the LSC microenvironment, it has remained unresolved whether LSCs preferentially situate within normal HSC niches or whether their niche requirements are more promiscuous. Here, we provide functional evidence that the spatial localization of phenotypically primitive human AML cells is restricted to niche elements shared with their normal counterparts, and that their intrinsic ability to initiate and retain occupancy of these niches can be rivaled by healthy hematopoietic stem and progenitor cells (HSPCs). When challenged in competitive BM repopulation assays, primary human leukemia-initiating cells (L-ICs) can be consistently outperformed by HSPCs for BM niche occupancy in a cell dose-dependent manner that ultimately compromises long-term L-IC renewal and subsequent leukemia-initiating capacity. The effectiveness of this approach could be demonstrated using cytokine-induced mobilization of established leukemia from the BM that facilitated the replacement of BM niches with transplanted HSPCs. These findings identify a functional vulnerability of primitive leukemia cells, and suggest that clinical development of these novel transplantation techniques should focus on the dissociation of L-IC–niche interactions to improve competitive replacement with healthy HSPCs during HSCT toward increased survival of patients.