The aim of this study was to examine the effects of human umbilical cord blood-derived CD34-positive endothelial progenitor cells (CD34+ EPCs) on osteoblastic differentiation of cultured human periosteal-derived osteoblasts (POs). CD34+ cells from human umbilical cord blood were sorted to purify more EPCs in characterization. These sorted cells showed CD31, VE-cadherin, and KDR expression as well as CD34 expression and formed typical tubes in Matrigel. These sorted cells were referred to as human cord blood-derived CD34+ EPCs. In in vivo bone formation using a miniature pig model, the newly formed bone was clearly examined in defects filled with polydioxanone/pluronic F127 (PDO/Pluronic F127) scaffolds containing either human umbilical cord blood-derived CD34+ EPCs and POs or human umbilical vein endothelial cells (HUVEC) and POs; however, the new bone had the greatest density in the defect treated with CD34+ EPCs and POs. Osteoblastic phenotypes of cultured human POs using ALP activity and von Kossa staining were also more clearly found in CD34+ EPC-conditioned medium than CD34-negative (CD34-) cell-conditioned medium, whereas HUVEC-conditioned medium had an intermediate effect. PCR array for common cytokines and growth factors showed that the secretion of interleukin (IL)-1β was significantly higher in CD34+ EPCs than in HUVEC, followed by level in CD34- cells. In addition, IL-1β also potently and dose dependently increased ALP activity and mineralization of POs in culture. These results suggest that human umbilical cord blood-derived CD34+ EPCs stimulates osteoblastic differentiation of cultured human POs. The functional role of human umbilical cord blood-derived CD34+ EPCs in increasing the osteogenic phenotypes of cultured human POs may depend on IL-1β secreted from human umbilical cord blood-derived CD34+ EPCs.