In the recent years, umbilical cord blood (UCB) has emerged as an alternative source of hematopoietic progenitors (CD34+) for allogeneic stem cell transplantation, mainly in patients lacking an HLA-matched marrow donor. Since 1998, about 2500 patients have received UCB transplants for a variety of malignant and non-malignant diseases. The vast majority of recipients were children with an average weight of 20kg, however, more than 500 UCB transplantations (UCBT) have already been performed in adults. The "naive" nature of UCB lymphocytes may explain the lower incidence and severity of graft vs. host disease (GvHD) encountered in UCBT compared to the allogeneic transplant setting. Furthermore, UCB is rich in primitive CD16-CD56++ NK cells, which possess significant proliferative and cytotoxic capacities and can be expanded using IL-12 or IL-15, so as to mount a substantial graft vs. leukemia (GvL) effect. The major disadvantage of UCB is the low yield of stem cells, resulting in higher rates of engraftment failure and slower time to engraftment compared to bone marrow transplantation (BMT). A rational approach thus involves ex vivo expansion of UCB derived hematopoietic precursors. All these issues are discussed in detail in this review.