Decompensated liver cirrhosis (LC), a life-threatening complication of chronic liver disease, is one of the major indications for liver transplantation. Recently, mesenchymal stem cell (MSC) transfusion has been shown to lead to the regression of liver fibrosis in mice and humans. This study examined the safety and efficacy of umbilical cord-derived MSC (UC-MSC) in patients with decompensated LC. A total of 45 chronic hepatitis B patients with decompensated LC, including 30 patients receiving UC-MSC transfusion, and 15 patients receiving saline as the control, were recruited; clinical parameters were detected during a 1-year follow-up period. No significant side-effects and complications were observed in either group. There was a significant reduction in the volume of ascites in patients treated with UC-MSC transfusion compared with controls (P < 0.05). UC-MSC therapy also significantly improved liver function, as indicated by the increase of serum albumin levels, decrease in total serum bilirubin levels, and decrease in the sodium model for end-stage liver disease scores. UC-MSC transfusion is clinically safe and could improve liver function and reduce ascites in patients with decompensated LC. UC-MSC transfusion, therefore, might present a novel therapeutic approach for patients with decompensated LC.