Human umbilical cord blood (UCB) is rich in diverse hematopoietic stem cells that are competent to differentiate into various cell types with immunological compatibility at transplantation. Thus, UCB is a potential source for the preparation of dendritic cells (DCs) to be used for cell therapy against inflammatory disorders or cancers. However, the immunological properties of UCB-derived DCs are not fully characterized. In this study, we investigated the phenotypes and functions of UCB monocyte-derived DCs (UCB-DCs) in comparison with those of adult peripheral blood (APB) monocyte-derived DCs (APB-DCs). UCB-DCs contained less CD1a(+) DCs, which is known as immunostimulatory DCs, than APB-DCs. UCB-DCs exhibited lower expression of CD80, MHC proteins, and DC-SIGN, but higher endocytic activity, than APB-DCs. Lipopolysaccharide stimulation of UCB-DCs minimally augmented the expression of maturation markers and production of interleukin (IL)-12 and tumor necrosis factor (TNF)-α, but potently expressed IL-10. When UCB-DCs were cocultured with CD14(+) cell-depleted allogeneic peripheral blood mononuclear cells, they weakly induced the proliferation, surface expression of activation markers, and interferon (IFN)-γ production of T lymphocytes compared with APB-DCs. UCB possessed higher levels of prostaglandin E2 (PGE2) than APB, which might be responsible for tolerogenic phenotypes and functions of UCB-DCs. Indeed, APB-DCs prepared in the presence of PGE2 exhibited CD1a(-)CD14(+) phenotypes with tolerogenic properties, including weak maturation, impaired IL-12 production, and negligible T lymphocyte activation as UCB-DCs did. Taken together, we suggest that UCB-DCs have tolerogenic properties, which might be due to PGE2 highly sustained in UCB.