Umbilical cord blood (UCB) is increasingly being used for human hematopoietic stem cell (HSC) transplantation in children but often requires pooling multiple cords to obtain sufficient numbers for transplantation in adults. To overcome this limitation, we have used an ex vivo two-week culture system to expand the number of hematopoietic CD34(+) cells in cord blood. To assess the in vivo function of these expanded CD34(+) cells, cultured human UCB containing 1 x 10(6) CD34(+) cells were transplanted into conditioned NOD-scid IL2rgamma(null) mice. The expanded CD34(+) cells displayed short- and long-term repopulating cell activity. The cultured human cells differentiated into myeloid, B-lymphoid, and erythroid lineages, but not T lymphocytes. Administration of human recombinant TNFalpha to recipient mice immediately prior to transplantation promoted human thymocyte and T-cell development. These T cells proliferated vigorously in response to TCR cross-linking by anti-CD3 antibody. Engrafted TNFalpha-treated mice generated antibodies in response to T-dependent and T-independent immunization, which was enhanced when mice were co-treated with the B cell cytokine BLyS. Ex vivo expanded CD34(+) human UCB cells have the capacity to generate multiple hematopoietic lineages and a functional human immune system upon transplantation into TNFalpha-treated NOD-scid IL2rgamma(null) mice.