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Abstract: Umbilical cord blood mononuclear cells (UCBMC) transplantation may improve hypoxia-induced brain injury in neonatal rats, but the mechanism is unclear. This study examines whether UCBMC promote neural stem cell (NSC) proliferation via the Sonic hedgehog (Shh) signaling pathway. The rats underwent left carotid ligation followed by hypoxic stress. UCBMC were transplanted 24h after hypoxia ischemia (HI), and immunohistochemistry, immmunoblotting, and morphology analyses were performed at different time points after transplantation. Increased numbers of NSCs were observed in the subventrical zone (SVZ) of the HI+UCBMC group, but these increases were attenuated by cyclopamine treatment. There were significant increases in Shh and Gli1 protein levels after transplantation in the HI group treated with UCBMC compared to HI rats treated with phosphate-buffered solution (PBS). Significantly more Gli1+DAPI+ cells were observed in the SVZ of the HI+UCBMC group compared to the HI+PBS and N+UCBMC groups, but few Gli1+DAPI+ cells were found in the SVZ of the HI+cyclopamine+UCBMC group. The HI+UCBMC group had significantly less neuronal loss in the cortex and CA1 sector of the hippocampus compared to the HI+PBS group, but more neuron loss was observed in the HI+cyclopamine+UCBMC group compared to HI+UCBMC. These results indicate that UCBMC may promote NSC proliferation and alleviate brain injury in HI neonatal rats via Shh signaling. [Copyright &y& Elsevier]