We isolated and expanded fibroblast-like cells from the Wharton's jelly of human umbilical cord successfully. Immunocytochemistry showed that they were positive for several markers of mesenchymal stem cells (CD73, CD90, and CD105) and integrin markers (CD29 and CD44), but negative for a hematopoietic cell maker (CD45) and an endothelial cell marker (CD31). Their differentiation into osteocytes and adipocytes under specific conditions indicated that they had multi-lineage differentiation potential. Therefore these results proved that the cells we obtained from Wharton's jelly were human umbilical cord mensenchymal stem cells (hUCMSCs). Using immunocytochemistry and Western blotting analysis, we found that after treatment with neuronal induction medium [NIM; consisting of brain-derived neurotrophic factor (BDNF) and low-serum media] for 14 days, hUCMSCs expressed a neuronal specific marker, microtubule associated protein 2 (MAP2), and extended neurite-like processes. After treatment with NIM, supplemented with hippocampal cholinergic neurostimulating peptide (HCNP) or rat denervated hippocampal extract [rDHE; derived from rat fimbria fornix (FF) transected hippocampus], hUCMSCs expressed choline acetytransferase (ChAT) and this action could be enhanced when cells were cultured with NIM, supplemented with HCNP and rDHE in combination. ELISA showed that these ChAT-positive cells could secrete acetylcholine (ACh). These findings indicate that hUCMSCs possess the potential of differentiation into functional ChAT-positive cells in vitro and provide a new candidate of cells for the cell transplantation to treat Alzheimer's disease (AD).