Bone marrow is soft, gelatinous tissue that fills the medullary cavities, the centers of bones. The two types of bone marrow are red bone marrow, known as myeloid tissue, and yellow bone marrow, or fatty tissue. A bone marrow transplant is a procedure to replace damaged or destroyed bone marrow with healthy bone marrow stem cells. Bone marrow is the soft, fatty tissue inside your bones. The bone marrow produces blood cells. Stem cells are immature cells in the bone marrow that give rise to all of your different blood cells. Bone marrow-derived CD34+ and CD 133+ cells, which exhibit endothelial phenotypes, have been shown to contribute to neovascularization.