Recent evidence indicates that human hematopoietic stem cell properties can be found among cells lacking CD34 and lineage commitment markers (CD34−Lin−). A major barrier in the further characterization of human CD34− stem cells is the inability to detect this population using in vitro assays because these cells only demonstrate hematopoietic activity in vivo. Using cell surface markers AC133 and CD7, subfractions were isolated within CD34−CD38−Lin− and CD34+CD38−Lin− cells derived from human cord blood. Although the majority of CD34−CD38−Lin− cells lack AC133 and express CD7, an extremely rare population of AC133+CD7− cells was identified at a frequency of 0.2%. Surprisingly, these AC133+CD7− cells were highly enriched for progenitor activity at a frequency equivalent to purified fractions of CD34+ stem cells, and they were the only subset among the CD34−CD38−Lin− population capable of giving rise to CD34+ cells in defined liquid cultures. Human cells were detected in the bone marrow of non-obese/severe combined immunodeficiency (NOD/SCID) mice 8 weeks after transplantation of ex vivo–cultured AC133+CD7− cells isolated from the CD34−CD38−Lin− population, whereas 400-fold greater numbers of the AC133−CD7− subset had no engraftment ability. These studies provide novel insights into the hierarchical relationship of the human stem cell compartment by identifying a rare population of primitive human CD34− cells that are detectable after transplantation in vivo, enriched for in vitro clonogenic capacity, and capable of differentiation into CD34+ cells.