With the emerging role of umbilical cord blood-derived mesenchymal stem cells (hUCB-MSC) for bone regeneration and delivery of therapeutic proteins, there is an increasing need for effective gene delivery systems to modify such cells. mTAT, a TAT peptide sequence bearing histidine and cysteine residues, has been successfully used for intracellular gene delivery. Using a gWiz-GFP plasmid, we demonstrated that polyethylenimine combined with mTAT (mTAT/PEI) displayed good transfection efficacy in hUCB-MSC. hUCB-MSC transfected with mTAT/PEI were shown to express more BMP-2 protein and mRNA, indicating the feasibility of using the cells as a BMP-2 delivery system. Importantly, compared to PEI25, a "gold standard" nonviral transfection polymer, mTAT/PEI had limited toxicity to the cells. Furthermore, we demonstrated enhanced osteogenic activity in vitro for BMP-2 expressing hUCB-MSC. These results provide encouraging evidence for the potential use of mTAT/PEI to genetically modify hUCB-MSC as an approach to enhance tissue regeneration.