OBJECTIVE Allogeneic transplantation with umbilical cord blood (UCB) in adult recipients is limited mainly by a low CD34+ cell dose. To overcome this shortcoming, human placenta as a novel source of human mesenchymal progenitor cell (MPC) was incorporated in an attempt to expand CD34+ cells from UCB in vitro. METHODS Human placenta MPC was isolated and characterized by morphologic, immunophenotypical, and functional analysis. UCB CD34+ cells were expanded by coculture with placental MPC. Suitable aliquots of cells were used to monitor cell production, clonogenic activity, and long-term culture-initiating culture (LTC-IC) output. Finally, the immunoregulatory effect of placental MPC was evaluated by T-cell proliferation assay. RESULTS In its undifferentiated state, placental MPC displayed fibroblastoid morphology; was CD73, CD105, CD29, CD44, HLA-ABC, and CD166 positive; produced fibronectin, laminin, and vimentin; but was negative for CD14, CD31, CD34, CD45, HLA-DR, and alpha-smooth muscle actin. Functionally, it could be induced into adipocytes, osteocytes, and chondrocytes. In vitro expansion of UCB hematopoietic cells, when cocultured with placental MPC in the presence of cytokines, was significantly enhanced: CD34+ cells by 14.89 +/- 2.32 fold; colony-forming cell (CFC) by 36.73 +/- 5.79 fold; and LTC-IC by 7.43 +/- 2.66 fold. Moreover, placental MPC could suppress T-cell proliferation induced by cellular stimuli. CONCLUSIONS These results strongly suggest that human placental MPC may be a suitable feeder layer for expansion of hematopoietic progenitors from UCB in vitro.