Within the bone marrow (BM), hematopoietic progenitor cells (HPCs) are localized in poorly oxygenated niches where they interact with the surrounding osteoblasts (OBs) through VLA4/VCAM-1 engagement, and are exposed to interleukin-6 (IL-6), stem cell factor (SCF), and chemokines such as CXCL12 (OB factors). Umbilical cord (UC) is more highly oxygenated that the BM microenvironment. When UC-HPCs are exposed to the 2% to 3% O(2) concentration found in the bone endosteum, their survival is significantly decreased. However, engagement of VLA-4 integrins on UCB-derived CD34(+) cells reduced cell death in 2% to 3% O(2) conditions, which was associated with an increase in phospho-Ser473 AKT and an increase in phospho-Ser9 GSK3b. Consistent with the role of GSK3b in destabilizing beta-catenin, there was more cytoplasmic beta-catenin in UC-HPCs exposed to 2% to 3% O(2) on fibronectin, compared with suspension culture. UC-HPCs cultured at 2% to 3% O(2) with OB factors showed an increase in nuclear beta-catenin and persistence of a small pool of CD34(+)38(-) HPCs. CFU assays followed by surface phenotyping of the plated colonies showed improved maintenance of mixed lineage colonies with both erythroid and megakaryocytic precursors. These studies provide a biologic perspective for how UC-derived HPCs adapt to the bone endosteum, which is low in oxygen and densely populated by osteoblasts.