Human umbilical cord blood, which in the past was discarded with the placental tissue, provides a convenient source of fetal hemopoietic cells for scientific analysis and clinical use. Cord blood cells are immature compared to analogous populations in adult peripheral blood. Cord blood B lymphocytes display unique phenotypic and functional characteristics. The antigens CD1C, CD38, CD5, and CD23, although normally expressed on only a small percentage of circulating B cells in adults, are highly expressed on cord blood B cells. Recent studies have demonstrated that whereas cord blood B cells are functionally naive, their potential is similar to that of adult B cells if optimal T-cell help is available. Thus, the failure of B-cell responses in cord blood is due to the T cells. The functional abnormalities of T cells from newborns can be summarized as a dominance of the effects of TH0 cells. Thus, the cytokines produced are immunosuppressive rather than mediating helper activity for B cells. NK activity in cord blood is also depressed compared to that in adults. Cord blood is a very rich source of hemopoietic progenitor cells. The spectrum of progenitors shows a predominance of early progenitor cells when compared with bone marrow. These cells provide an alternative source to adult bone marrow for stem cells to use for hemopoietic reconstitution and as targets in the treatment of hereditary deficiencies by gene therapy. These features make cord blood a unique research tool to investigate hemopoietic ontogeny and a unique clinical tool for transplantation.