**Abstract** : We propose an algebraic approach to stochastic graph-rewriting which extends the classical construction of the Heisenberg-Weyl algebra and its canonical representation on the Fock space. Rules are seen as particular elements of an algebra of 'diagrams' (the diagram algebra D). Diagrams can be thought of as formal computational traces represented in partial time. They span a vector space which carries a natural filtered Hopf algebra structure. Diagrams can be evaluated to normal diagrams (each corresponding to a rule) and generate an associative unital (non-commutative) ˚-algebra of rules (the rule algebra R). Evaluation becomes a morphism of uni-tal associative algebras which maps general diagrams in D to normal ones in R. In this algebraic reformulation, usual distinctions between graph observables (real-valued maps on the set of graphs defined by counting subgraphs), and rules disappear. Instead, natural algebraic substructures of R arise: formal observables are seen as rules with equal left and right hand sides and form a commutative subalgebra, the ones counting subgraphs forming a sub-subalgebra of identity rules. Actual graph-rewriting (of the DPO type) is recovered as a canonical representation of the rule algebra as linear operators over the vector field generated by (isomorphism classes of) finite graphs. The construction of the representation is in close analogy and subsumes the classical (multi-type bosonic) Fock space representation of the Heisenberg-Weyl algebra. This subtle shift of point of view (away from its canonical representation to the rule algebra itself) has far-reaching and unexpected consequences. We find that natural variants of the evaluation mor-phism map give rise to concepts of graph transformations hitherto not considered (these will be described in a separate paper, as in this extended abstract we limit ourselves to the simplest concept namely that of DPO-rewriting). We prove very simply a DPO version of the jump-closure theorem, namely that the sub-space of representations of formal graph observables closed under the action of any rule set. From this new jump-closure result follows that for any set of rules R, one can derive a formal and self-consistent Kolmogorov backward equation for (representations) of formal observables.