Umbilical cord blood has been intensively studied as a source of hematopoietic stem cells for transplantation as well as the target for gene therapy. In this study we used a single step density separation to obtain a light density mononuclear cells. The isolated cell population was significantly enriched with progenitor cells. The population also contained sufficient number of primitive hematopoietic stem cells, allowing expansion of cells in serial culture with the addition of IL-6, G-CSF, Epo and kit-ligand and long-term hematopoiesis on preliminary formed stromal layer. Addition of cytokines resulted in a significant increase of cell proliferative activity that is a susceptible target for retrovirally mediated gene transfer. Retroviral transduction with a mutated human dihydrofolate reductase gene assured a significant increase in metatrixate resistance of CFU-GM and selective growth advantage for the transduced cell population. Our data indicate that enriched mononuclear cell population from cord blood can reach high level of metatrixate resistance and is capable of generating a high amount of both drug-resistant progenitors and mature cells.