Recently, our laboratory began to characterize the mononuclear cells from human umbilical cord blood (HUCB) both in vitro and in vivo. These cryopreserved human cells are available in unlimited quantities and it is believed that they may represent a source of cells with possible therapeutic and practical value. Our previous molecular and immunocytochemical studies on cultured HUCB cells revealed their ability to respond to nerve growth factor (NGF) by increased expression of neural markers typical for nervous system-derived stem cells. In addition, the DNA microarray detected downregulation of several genes associated with development of blood cell lines. To further explore the survival and phenotypic properties of HUCB cells we transplanted them into the developing rat brain, which is known to provide a conducive environment for development of neural phenotypes. Prior to transplantation, HUCB cells were either cultured with DMEM and fetal bovine serum or were exposed to retinoic acid (RA) and nerve growth factor (NGF). Neonatal pups (1 day old) received unilateral injection of cell suspension into the anterior part of subventricular zone. One month after transplantation animals were perfused, their brains cryosectioned, and immunocytochemistry was performed for identification of neural phenotypes. Our results clearly demonstrated that approximately 20% of transplanted HUCB survived (without immunosuppression) within the neonatal brain. Additionally, double-labeling with cell-type-specific markers revealed that some HUCB-derived cells (recognized by anti-human nuclei labeling) were immunopositive for glial fibrillary acidic protein (GFAP) and few donor cells expressed the neuronal marker TuJ1 (class III beta-tubulin). These findings suggest that at least some of the transplanted HUCB cells differentiated into cells with distinct glial or neuronal phenotypes after being exposed to instructive signals from the developing brain.