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Infantile hemangioma is a vascular tumor that occurs in 5% to 10% of infants of European descent. A hallmark of infantile hemangioma is its life cycle, which is divided into 3 stages. The proliferating phase spans in the first year of postnatal life and is characterized by cellular masses without a defined vascular architecture and nascent blood vessels with red blood cells evident within the lumenal space. The involuting phase begins at 1 year of age and continues for 3 to 5 years. Proliferation slows or stops in this phase, and histologic examination shows that the blood vessel architecture becomes more obvious and vessel size is enlarged. The involuted phase reaches 5 to 8 years of age, at which point blood vessels are replaced with a fibrofatty residuum and capillary-sized channels. The growth and involution life cycle of infantile hemangioma are very different from other vascular tumors and vascular malformations, which do not regress and can occur at any time during childhood or adult life. Many laboratories have reported on the endothelial characteristics of the cellular masses that are prominent in the proliferating phase of infantile hemangioma, as well as their immature appearance. These studies, along with isolation and characterization of hemangioma-derived cell populations with progenitor cell properties, have lead to an emerging hypothesis that hemangioma is caused by an abnormal or delayed differentiation of mesodermal progenitor cells into the disorganized mass of blood vessels. In this paper, we discuss the literature that supports this emerging hypothesis.