Peripheral vascular disease affects ~20 % of the population over 50 years of age and is a complication of type 2 diabetes. Cell therapy studies revealed that cells from older or diabetic donors have a reduced capacity to induce tissue repair compared to healthy and younger cells. This fact greatly impedes the use of autologous cells for treatment. Umbilical cord blood CD34+ cells are a source of angiogenic cells but unlike bone marrow CD34+ angiogenic cells, achieving clinically significant cell numbers has been difficult without in vitro expansion. We report here that culturing CD34+/CD45+ blood cells from frozen umbilical cord blood units in a medium supplemented with FGF4, SCF and FLT3-ligand produced a population of cells that remain CD34+/CD45+ but have an increased capacity for tissue healing. The cultured CD34+ cells were compared directly to non-cultured CD34+ cells in a mouse model of ischemia. Cultured CD34+ cells demonstrated strong paracrine signaling as well as the capacity to differentiate into endothelial cells, smooth muscle and striated muscle. We observed an improvement in blood flow and a significant reduction in foot necrosis. A second study was completed to assess the safety of the cells. No adverse effects were associated with the injection of the cultured cells. Our method described here for culturing umbilical cord blood cells resulted in cells with a strong paracrine effect that induces substantial tissue repair in a murine model of hind limb ischemia and evidence of engraftment and differentiation of the cultured cells into new vasculature and muscle.