The human umbilical cord is a rich source of autologous stem and progenitor cells. Interestingly, subpopulations of these, particularly mesenchymal-like cells from both cord blood and the cord stroma, exhibited a potential to be differentiated into neuron-like cells in culture. Umbilical cord blood stem cells have demonstrated efficacy in reducing lesion sizes and enhancing behavioral recovery in animal models of ischemic and traumatic central nervous system (CNS) injury. Recent findings also suggest that neurons derived from cord stroma mesenchymal cells could alleviate movement disorders in hemiparkinsonian animal models. We review here the neurogenic potential of umbilical cord stem cells and discuss possibilities of their exploitation as an alternative to human embryonic stem cells or neural stem cells for transplantation therapy of traumatic CNS injury and neurodegenerative diseases.