A method and apparatus are provided for implementing thread replacement for optimal performance in a two-tiered multithreading structure. A first tier thread state storage stores a limited number of runnable thread register states. A second tier thread storage facility stores a second number of thread states that is greater than the limited number of runnable thread register states. Each stored thread state includes predefined selection data. A runnable thread selection logic coupled between the first tier thread state storage and the second tier thread storage facility, uses the stored predefined selection data for selectively exchanging thread states between the first tier limited number of runnable thread register states and the second tier thread storage facility.