Human umbilical cord blood (HUCB) provides a source of progenitors for cell therapy. We isolated and characterized an HUCB-derived population of progenitors (HUCBNP), differentiated toward neuronal phenotype by human neuroblastoma-conditioning medium (CM) and nerve growth factor (NGF), which have been found to confer neuroprotection toward hypoxia-mediated neuronal injury. This study investigated whether interferon-γ (IFN-γ) contributes to HUCBNP differentiation. IFN-γ was detected in the CM used for the induction of differentiation of HUCBNP and a neutralizing antibody of IFN-γ significantly inhibited either IFN-γ or CM-induced differentiation. Transcriptome analysis of CM-differentiated HUCBNP, identified 86 genes as highly upregulated, among them 25 were IFN-induced (such as 2′,5′-oligoadenylate synthetase 1 and 2, IFN-induced protein and transmembrane proteins, STAT1 (IFN-γ-receptor signal transducer and activator of transcription) and chemokine C-X-C motif ligand 5). Treatment of HUCBNP with human recombinant IFN-γ, inhibited cell proliferation in a dose-dependent manner. IFN-γ (1-100ng/ml) enhanced neuronal differentiation, expressed by neurite outgrowths and increased expression of the neuronal markers β-tubulin III, microtubule-associated protein 2, neuronal nuclei, neurofilament M and neuronal-specific enolase. IFN-γ additively cooperated with NGF to induce the differentiation of HUCBNP. These data indicate that IFN-γ promotes neuronal differentiation of HUCB-derived progenitors, proposing its use in future protocols towards cell therapy.