It is well accepted that umbilical cord blood has been a source for hematopoietic stem cells. However, controversy exists as to whether cord blood can serve as a source of mesenchymal stem cells, which can differentiate into cells of different connective tissue lineages such as bone, cartilage, and fat, and little success has been reported in the literature about the isolation of such cells from cord blood. Here we report a novel method to obtain single cell-derived, clonally expanded mesenchymal stem cells that are of multilineage differentiation potential by negative immunoselection and limiting dilution. The immunophenotype of these clonally expanded cells is consistent with that reported for bone marrow mesenchymal stem cells. Under appropriate induction conditions, these cells can differentiate into bone, cartilage, and fat. Surprisingly, these cells were also able to differentiate into neuroglial- and hepatocyte-like cells under appropriate induction conditions and, thus, these cells may be more than mesenchymal stem cells as evidenced by their ability to differentiate into cell types of all 3 germ layers. In conclusion, umbilical cord blood does contain mesenchymal stem cells and should not be regarded as medical waste. It can serve as an alternative source of mesenchymal stem cells to bone marrow.