There is an increasing interest in generating retinal pigment epithelial (RPE) cells from stem cells for treating degenerative eye diseases. However, whether human umbilical cord mesenchymal stem cells (HUCMSCs) can differentiate into RPE-like cells in a co-culture system has not been fully understood. In this study, induction of HUCMSC differentiation into RPE-like cells was performed by co-culturing HUCMSCs and a human RPE-like cell line (ARPE19) in a transwell system and then analyzed for biomarkers using quantitative reverse transcription polymerase chain reaction (RT-PCR) and immunofluorescence staining technique. Moreover, the functional characterization of induced cells was carried out by examining their phagocytic and neurotrophic factor–secreting activities. Our results showed that mRNA expressions of RPE-specific markers—MITF, OTX2, RPE65, PEDF, PME17, and CRALBP—and protein markers—RPE65, CRALBP, and ZO-1—were significantly increased in HUCMSC-derived RPE-like cells. Functional characteristic studies showed that these induced cells were capable of engulfing photoreceptor outer segments and secreting brain-derived neurotrophic factor (BDNF) and glial-derived neurotrophic factor (GDNF), which are typical functions of RPE-like cells. Overall, the study findings indicate that the morphology and proliferation of HUCMSCs can be maintained in a serum-free medium, and differentiation into RPE-like cells can be induced by simply co-culturing HUCMSCs with ARPE19 cells. Thus, the study provides fundamental information regarding the clinical-scale generation of RPE-like cells from HUCMSCs.