CD34 is a transmembrane glycoprotein constitutively expressed on endothelial cells and hematopoietic stem cells. Use of CD34-recognizing antibodies has helped in the identification and isolation of CD34+ endothelial precursors from embryonic and adult tissues. However, CD34-null mice display no vascular abnormalities, demonstrating that CD34 antigen expression is not required for normal vascular development. Here we show that a CD34− cell population that includes endothelial cell precursors can be isolated from cord blood. In the presence of angiogenic factors, these cells mature to express the endothelial cell markers vascular endothelial-cadherin, vascular endothelial growth factor receptor-1 and −2, Tie-1 and −2 (tyrosine kinase with immunoglobulin and epidermal growth factor homology domains), von Willebrand factor, and CD31 while maintaining their CD34− status, and can be expanded in vitro for over 20 passages. Moreover, in functional studies, these cells can undergo extracellular matrix-dependent morphogenic changes into capillary-like tubular structures. When transplanted into immunodeficient mice in conjunction with tumor cells or with the proangiogenic factor basic fibroblast growth factor, these cells can form functional microvessels arising along with host blood cells. These studies provide strong evidence for the existence of CD34− endothelial cell precursors in cord blood and suggest the use of ex vivo-expanded cord blood CD34− cells as a unique tool for the investigation of postnatal lineage diversification.