The efficacy of cardiac repair by stem cell administration relies on a successful functional integration of injected cells into the host myocardium. Safety concerns have been raised about the possibility that stem cells may induce foci of arrhythmia in the ischemic myocardium. In a previous work (36), we showed that human cord blood CD34(+) cells, when cocultured on neonatal mouse cardiomyocytes, exhibit excitation-contraction coupling features similar to those of cardiomyocytes, even though no human genes were upregulated. The aims of the present work are to investigate whether human CD34(+) cells, isolated after 1 wk of coculture with neonatal ventricular myocytes, possess molecular and functional properties of cardiomyocytes and to discriminate, using a reporter gene system, whether cardiac differentiation derives from a (trans)differentiation or a cell fusion process. Umbilical cord blood CD34(+) cells were isolated by a magnetic cell sorting method, transduced with a lentiviral vector carrying the enhanced green fluorescent protein (EGFP) gene, and seeded onto primary cultures of spontaneously beating rat neonatal cardiomyocytes. Cocultured EGFP(+)/CD34(+)-derived cells were analyzed for their electrophysiological features at different time points. After 1 wk in coculture, EGFP(+) cells, in contact with cardiomyocytes, were spontaneously contracting and had a maximum diastolic potential (MDP) of -53.1 mV, while those that remained isolated from the surrounding myocytes did not contract and had a depolarized resting potential of -11.4 mV. Cells were then resuspended and cultured at low density to identify EGFP(+) progenitor cell derivatives. Under these conditions, we observed single EGFP(+) beating cells that had acquired an hyperpolarization-activated current typical of neonatal cardiomyocytes (EGFP(+) cells, -2.24 ± 0.89 pA/pF; myocytes, -1.99 ± 0.63 pA/pF, at -125 mV). To discriminate between cell autonomous differentiation and fusion, EGFP(+)/CD34(+) cells were cocultured with cardiac myocytes infected with a red fluorescence protein-lentiviral vector; under these conditions we found that 100% of EGFP(+) cells were also red fluorescent protein positive, suggesting cell fusion as the mechanism by which cardiac functional features are acquired.