Here we report the capacity of human cord blood (CB)-derived cells to generate insulin-producing cells. To investigate in vivo capacity of human CB-derived cells, T cell-depleted mononuclear cells were intravenously transplanted into nonobese diabetic/severe combined immunodeficient/beta2-microglobulinnull mice within 48 hours of birth. At 1-2 months post-transplantation, immunofluorescence staining for insulin and fluorescence in situ hybridization (FISH) analysis using a human chromosome probe indicated that human CB-derived cells generated insulin-producing cells at a frequency of 0.65%+/-0.64% in xenogeneic hosts. Reverse transcription-polymerase chain reaction analysis confirmed the transcription of human insulin in the pancreatic tissue of the recipient mice. To clarify the mechanism underlying CB-derived insulin-producing cells, double FISH analysis using species-specific probes was performed. Almost equal proportions of human chromosome+ murine chromosome- insulin+ cells and human chromosome+ murine chromosome+ insulin+ cells were present in recipient pancreatic islets. Taken together, human CB contains progenitor cells, which can generate insulin-producing cells in recipient pancreatic tissues across a xenogeneic histocompatibility barrier by fusion-dependent and -independent mechanisms.