In our study we confirmed the potential of human umbilical cord blood cells to differentiate into insulin-producing cells following transplantation into immunocompromised mice. The average number of C-peptide-positive human cells per animal was 18 +/- 13 as assessed by immunofluorescence staining and fluorescence in situ hybridization specific for human ALU sequence. Differentiation into insulin-producing cells was further confirmed by reverse transcription-polymerase chain reaction specific for human insulin mRNA. Successful differentiation required sublethal irradiation of xenogeneic recipient at least at a dose of 3 Gy. However, transplantation of human umbilical cord blood cells did not improve hyperglycaemia in diabetic animals. The results of our study show that human umbilical cord blood may be considered as a potential source of stem cells for treatment of diabetes mellitus.