We identified stem cells from the umbilical cord blood, designated cord blood–stem cells (CB–SC). CB–SC displayed important embryonic stem (ES) cell characteristics including expression of ES-cell-specific molecular markers including transcription factors OCT-4 and Nanog, along with stage-specific embryonic antigen (SSEA)-3 and SSEA-4. CB–SC also expressed hematopoietic cell antigens including CD9, CD45 and CD117, but were negative for CD34. CB–SC displayed very low immunogenicity as indicated by expression of a very low level of major histocompatibility complex (MHC) antigens and failure to stimulate the proliferation of allogeneic lymphocytes. CB–SC could give rise to cells with endothelial-like and neuronal-like characteristics in vitro, as demonstrated by expression of lineage-associated markers. Notably, CB–SC could be stimulated to differentiate into functional insulin-producing cells in vivo and eliminated hyperglycemia after transplantation into a streptozotocin-induced diabetic mouse model. These findings may have significant potential to advance stem-cell-based therapeutics.