Mesenchymal stem cells (MSCs) are a group of cells present in bone-marrow stroma, cord blood, Wharton’s jelly and the stroma of various organs with the capacity for mesoderm-like cell differentiation. The aim of the present work is to isolate mesenchymal stem cells (MSCs) from human umbilical cord; Wharton’s jelly and to examine the differentiation potential of these (MSCs) toward the epithelial lineage. Human MSCs, derived from Wharton’s jelly of umbilical cord (≈31cm) after a caesarian section in full term delivery of 10 cases, were localized and isolated. Then primary culture was done to enrich and enhance their proliferation. These MSCs were detected after an average of 21-30 days not only morphologically, as a uniform spindle fibroblast like cells, and reached 70%-80% confluence with a good cellular yield but also via their immunophenotypic analysis which showed positivity for CD29, CD90, CD105, CD166 and negativity for CD34. Later, their differentiation potential was determined by co-culture with conditioning medium that include bone morphogenetic protein-4 (BMP-4), ascorbic acid, and human epithelium growth factor in a complete medium. These sets of conditions resulted in the expression of keratinocyte markers, namely pancytokeratin (mean value 92%) and cytokeratin19 (mean value 74%) using immunohistochemistry. In conclusion, these findings may have a significant impact on studies of human epithelial differentiation, functional genomics, pharmacological testing, cell therapy and tissue engineering by helping to eliminate worrying ethical and technical issues.