Tumor necrosis factor apoptosis ligand (TRAIL) is a type II membrane-bound ligand displaying expression in a broad range of tissues and exhibiting a high grade of homology with the cytotoxic Fas ligand. Interest in TRAIL grew after evidence emerged, that induction of TRAIL-mediated signaling destroyed malignant cells while sparing normal cells. Employing the extrinsic pathway of apoptosis, TRAIL-stimulation is characterized by initial adaptor recruitment and the subsequent activation of caspases. Besides promoting apoptosis, stimulation of the TRAIL receptors may also activate survival signals via the transcription factor NF-κB. Moreover, evaluation of the physiological roles of TRAIL-mediated signaling pathways provides evidence for a regulatory function within the immune system. Thus a complex picture of TRAIL-mediated signaling evolves, underscoring the necessity to define its modes of action while assessing its therapeutic potential. This review outlines the current knowledge on the physiological role of TRAIL and discusses its therapeutic potential with particular focus on malignancies of the hematopoietic system.