The current literature suggests that cord blood (CB) cells are functionally immature. We previously reported that CB sera inhibit T cell proliferation and suggested that the microenvironment in which CB T cells reside may be, in part, responsible for their reduced function. In this study we have tried to explain some of the actions of the CB sera on peripheral blood mononuclear cells (PBMC). We showed that, as expected CB sera decreased the anti-CD3 and anti-CD28-induced proliferative response of PBMC (p < 0.01) but unexpectedly, increased the interleukin-2 (IL-2) specific proliferation of both a human T cell line (p < 0.005) and T cells within a mononuclear cell population (p < 0.05). These findings prompted us to analyse the effect of CB sera on the T cell ability to make and respond to IL-2. Stimulation of T cells in the presence of CB sera increased the frequency of IL-2 producing cells (p < 0.005) (but not the amount of IL-2 secreted) and resulted in a higher expression of CD25 (p < 0.05). Furthermore CB sera (in the presence and absence of IL-2) made the cells apoptose less (p < 0.005) than adult sera. Our results go some way to explaining the effect of the CB microenvironment on CB cellular function.