Umbilical cord blood (UCB) is being used for hematopoietic rescue after myeloablative therapy in a rapidly growing number of patients. Recent developments of cord blood banking, ex vivo progenitor expansion and gene therapy techniques have raised the issue of efficient progenitor and stem cell enrichment procedures using UCB. We have used discontinuous density gradient techniques to analyze progenitor distribution in the mononuclear cell fraction of cord blood. This resulted in establishment of a highly reproducible, rapid, cost-effective single-step density separation method that generates a light density fraction, which when compared to conventional mononuclear cells has a high number of clonogenic progenitors, can be extensively expanded in vitro for up to 21 days and has the ability to sustain long-term hematopoiesis when inoculated on a preformed stromal layer. It can also serve as an efficient target for retrovirally mediated gene transfer, utilizing a vector expressing a mutated dihydrofolate reductase gene that confers methotrexate resistance.