Vascular growth is necessary for normal lung development. Although endothelial progenitor cells (EPCs) play an important role in vascularization, little is known about EPC function in congenital diaphragmatic hernia (CDH), a severe neonatal condition that is associated with pulmonary hypoplasia. We hypothesized that the function of endothelial colony-forming cells (ECFCs), a type of EPC, is impaired in CDH. Cord blood (CB) was collected from full-term CDH patients and healthy controls. We assessed CB progenitor cell populations as well as plasma vascular endothelial growth factor (VEGF) and stromal cell-derived factor 1α (SDF1α) levels. CB ECFC clonogenicity; growth kinetics; migration; production of VEGF, SDF1α, and nitric oxide (NO); vasculogenic capacity; and mRNA expression of VEGF-A, fms-related tyrosine kinase 1 (FLT1), kinase insert domain receptor (KDR), nitric oxide synthase (NOS) 1-3, SDF1, and chemokine (C-X-C motif) receptor 4 (CXCR4) were also assessed. Compared with controls, CB ECFCs were decreased in CDH. CDH ECFCs had reduced potential for self-renewal, clonogenicity, proliferation, and migration. Their capacity for NO production was enhanced but their response to VEGF was blunted in CDH ECFCs. In vivo potential for de novo vasculogenesis was reduced in CDH ECFCs. There was no difference in CB plasma VEGF and SDF1α concentrations, VEGF and SDF1α production by ECFCs, and ECFC mRNA expression of VEGF-A, FLT1, KDR, NOS1-3, SDF1, and CXCR4 between CDH and control subjects. In conclusion, CB ECFC function is disrupted in CDH, but these changes may be caused by mechanisms other than alteration of VEGF-NO and SDF1-CXCR4 signaling.