Stem cell transplantation (SCT) has achieved significant therapeutic success over the last 10 years, providing a viable treatment option for many previously incurable diseases. However, several inherent limitations of the procedure have restricted its widespread use. These include: lack of sufficient donors for all recipients, a period of bone marrow (BM) aplasia leading to severe, prolonged neutropenia and thrombocytopenia, and the potential for tumor contamination in autologous SCT. Umbilical cord blood (UCB) provides a unique, and potentially more successful, approach to alleviating these limitations. Ex vivo manipulation of hematopoietic stem (HSCs) and progenitor cells (HPCs) derived from UCB using a liquid culture system has revealed that the primitive HSCs from UCB are not identical to their BM counterparts. In fact, these cells may derive from a more primitive stem cell compartment. Ultimately, successful engraftment of UCB HSCs manipulated in an ex vivo environment may lead to a larger number of these life-saving procedures being performed and the full potential of SCT realized.