Alopecia is the medical description of the loss of hair from the head or body. Alopecia tends to be involuntary and unwelcome. Alopecia does not vitally influence one`s life but patients who undergo alopecia appeal severe mental stress. The number of alopecia patients increases steadily. The current therapies used for treating alopecia have a number of limitations and to overcome such problems, many researchers have attempted to revive hair follicles by in vitro culturing hair follicle cells and implanting them in the treatment area. In this study, umbilical cord-derived mesenchymal stem cells(UC-MSCs) could be isolated and expanded successfully from the Wharton`s Jelly. Culture-expanded UC-MSCs formed aggregates similar to native dermal papilla(DP) in size and morphology under the special medium. Also the aggregates showed similar protein expression pattern of primary dermal papilla cells(DPCs). To confirm whether the aggregates could induce hair follicle instead of DP, they were transplanted with outer root sheath cells(ORSCs) in athymic nude mice`s inner-dermis where cells underwent proliferation and differentiation. After 6 weeks of transplantation, we observed new hairs on the mice`s scalp apparently. In conclusion, our results suggest that UC-MSC would be one of the cell sources for the treatment of alopecia in the future.