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Mesenchymal stem cells (MSCs) have the ability to self-renew and differentiate into multi-lineage cells, thus highlighting the feasibility of using umbilical cord blood-derived MSCs (UCB-MSCs) for cell-therapy and tissueengineering. However, the low numbers of UCB-MSC derived from clinical samples requires that an ex vivo expansion step be implemented. As most stem cells reside in low oxygen tension environments (i.e., hypoxia), we cultured the UCBMSCs under 3% O 2 or 21% O 2 and the following parameters were examined: proliferation, senescence, differentiation and stem cell specific gene expression. UCB-MSCs cultured under hypoxic conditions expanded to significantly higher levels and showed less senescence compared to UCB-MSCs cultured under normoxic conditions. In regards to differentiation potential, UCB-MSCs cultured under hypoxic and normoxic conditions both underwent similar levels of osteogenesis as determined by ALP and von Kossa assay. Furthermore, UCB-MSCs cultured under hypoxic conditions exhibited higher expression of OCT4, NANOG and SOX2 genes. Moreover, cells expanded under hypoxia maintained a stem cell immnunophenotype as determined by flow cytometry. These results demonstrate that the expansion of human UCB-MSCs under a low oxygen tension microenvironment significantly improved cell proliferation and differentiation. These results demonstrate that hypoxic culture can be rapidly and easily implemented into the clinical-scale expansion process in order to maximize UCB-MSCs yield for application in clinical settings and at the same time reduce culture time while maintaining cell product quality.