Human umbilical cord and placental blood provide a rich source of hematopoietic stem cells. On the basis of this finding, umbilical cord blood stem cells (CBSCs) have been used to reconstitute hematopoiesis in children with malignant and nonmalignant diseases after treatment with myeloablative doses of chemoradiotherapy. Early results have been sufficiently encouraging to (1) embark on large-scale banking of cord blood for purposes of future autologous and allogeneic stem cell transplantation, (2) warrant studies of in vitro CBSC expansion, (3) initiate investigations of retroviral-mediated gene transfer into CBSCs for future gene therapy trials, and (4) justify the development of CBSC study groups in both Europe and the United States. This review briefly summarizes what is known about CBSCs in transplantation as well as potential future directions for this unique source of hematopoietic stem cells.