A hallmark of infantile hemangioma, the most common tumor of infancy, is its dramatic growth after birth, by diffuse proliferation of immature endothelial cells, followed by spontaneous regression. The growth and involution of infantile hemangioma is quite different from other vascular anomalies, which do not regress and can occur at any time during life. Some hemangioma lesions can be extremely disfiguring and destructive to normal tissue and may even be life-threatening. Unfortunately, existing therapeutic approaches have limited success and significant adverse effects of some treatment modalities limit their use. Better understanding of the pathogenesis of hemangioma will enable the development of better therapeutic strategies. Herein, we review recent studies and new hypotheses on the pathogenesis of the tumor. Detailed mechanisms of activated vascular endothelial growth factor (VEGF) signaling in tumor cells, identification of their origin and characterization of multipotent stem cells that can give rise to infantile hemangioma are shedding new light on this intriguing vascular tumor. © 2010 Japanese Dermatological Association.