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E ndothelial precursor cells (EPCs) have been identified in adult peripheral blood. We examined whether EPCs could be isolated from umbilical cord blood, a rich source for hematopoietic progenitors, and whether in vivo transplantation of EPCs could modulate postnatal neovascularization. Numerous cell clusters, spindle-shaped and attaching (AT) cells, and cord-like structures developed from culture of cord blood mononuclear cells (MNCs). Fluorescence-trace experiments revealed that cell clusters, AT cells, and cord-like structures predominantly were derived from CD34-positive MNCs (MNC^CD34+). AT cells and cell clusters could be generated more efficiently from cord blood MNCs than from adult peripheral blood MNCs. AT cells incorporated acetylated-LDL, released nitric oxide, and expressed KDR, VE-cadherin, CD31, and von Willebrand factor but not CD45. Locally transplanted AT cells survived and participated in capillary networks in the ischemic tissues of immunodeficient nude rats in vivo. AT cells thus had multiple endothelial phenotypes and were defined as a major population of EPCs. Furthermore, laser Doppler and immunohistochemical analyses revealed that EPC transplantation quantitatively augmented neovascularization and blood flow in the ischemic hindlimb. In conclusion, umbilical cord blood is a valuable source of EPCs, and transplantation of cord blood–derived EPCs represents a promising strategy for modulating postnatal neovascularization.