Human fetal cord blood contains subsets of mononuclear cells with the potential to form both hematological and endothelial cells. Vascular progenitor cells, which can produce all three elements of mature blood vessels, including smooth muscle, have been identified in animals. We hypothesized that similar multipotential progenitor cells exist in humans and used the expression of alpha-smooth muscle actin (alpha-SMA) to identify such cells in fetal cord blood. Mononuclear cell preparations were isolated from human umbilical cord blood and CD34(+) and CD133(+) cells obtained by magnetic bead separation. Isolated cells were cultured on fibronectin-coated dishes with medium containing vascular endothelial growth factor, basic fibroblast growth factor, and insulin-like growth factor. mRNA was extracted, and the expression of alpha-SMA and a number of endothelial cell markers (VEGFR-2, vWF, eNOS, VE-Cadhein, PECAM-1 and Tie-2) was determined by reverse transcriptase-PCR techniques. Human umbilical vein endothelial cells (HUVECs) were used as positive controls. Freshly isolated CD34(+) and CD133(+) cells expressed all endothelial cell markers, but did not express alpha-SMA. HUVECs expressed alpha-SMA. Following 4 weeks of culture, CD34(+) isolates produced morphologically endothelial-like cells that expressed both endothelial cell markers and alpha-SMA. CD133(+) cells failed to produce morphological endothelial-like cells but expressed a range of endothelial markers. However, they did not express alpha-SMA. Following culture in an endothelial cell-promoting environment, CD34(+), but not CD133(+), isolates produced endothelial-like cells that expressed alpha-SMA. Human fetal cord blood contains a population of cells that may differentiate toward both an endothelial and a smooth muscle phenotype in culture.