Adult stem cell-based therapy is a promising novel approach for treatment of acute lung injury. Here we investigated the therapeutic potential of freshly isolated human umbilical cord blood CD34(+) progenitor cells (fCB-CD34(+) cells) in a mouse model of acute lung injury. At 3 h post-lipopolysaccharide (LPS) challenge, fCB-CD34(+) cells were transplanted i.v. to mice while CD34(-) cells or PBS were administered as controls in separate cohorts of mice. We observed that fCB-CD34(+) cell treatment inhibited lung vascular injury evident by decreased lung vascular permeability. In contrast, CD34(-) cells had no effects on lung vascular injury. Lung inflammation determined by myeloperoxidase activity, neutrophil sequestration and expression of pro-inflammatory mediators was attenuated in fCB-CD34(+) cell-treated mice at 26 h post-LPS challenge compared to PBS or CD34(-) cell-treated controls. Importantly, lung inflammation in fCB-CD34(+) cell-treated mice was returned to normal levels as seen in basal mice at 52 h post-LPS challenge whereas PBS or CD34(-) cell-treated control mice exhibited persistent lung inflammation. Accordingly, fCB-CD34(+) cell-treated mice exhibited a marked increase of survival rate. Employing in vivo 5-bromo-2'-deoxyuridine incorporation assay, we found a drastic induction of lung endothelial proliferation in fCB-CD34(+) cell-treated mice at 52 h post-LPS compared to PBS or CD34(-) cell-treated controls, which contributed to restoration of vascular integrity and thereby inhibition of lung inflammation. Taken together, these data have demonstrated the protective effects of fCB-CD34(+) cell on acute lung injury induced by LPS challenge, suggesting fCB-CD34(+) cells are an important source of stem cells for the treatment of acute lung injury.