Human cord and placental blood provides a rich source of hematopoietic stem cells. On the basis of this finding, umbilical cord blood stem cells have been used to reconstitute hematopoiesis in children with malignant and nonmalignant diseases after treatment with myeloablative doses of chemoradiotherapy. Early results show that a single cord blood sample provides enough hematopoietic stem cells to provide short- and long-term engraftment, and that the incidence and severity of graft-versus-host disease has been low even in HLA-mismatched transplants. These results are encouraging enough to embark on the large-scale banking of cord blood for future allogeneic and autologous stem cell transplantation, to promote studies on the unique properties of fetal and neonatal hematopoiesis, to study the immunologic properties of cord blood cells, and to initiate investigations on gene transfer into human cord blood cells for future gene therapy trials. This review briefly summarizes the current knowledge on cord blood transplantation as well as the future development of research on this unique source of hematopoietic stem cells.