Mesenchymal stem cells (MSCs) are highly useful in a variety of cell therapies owing to their multipotential differentiation capability. MSCs derived from umbilical cord blood are generally isolated by their plastic adherence without using specific cell surface markers and examined for their osteogenic, adipogenic, and chondrogenic differentiation properties retrospectively. Here, we report 2 subpopulations of MSCs, separated based on aldehyde dehydrogenase (ALDH) activity. MSCs with a high ALDH activity (Alde-High) proliferated more than those with a low ALDH activity (Alde-Low). Alde-High MSCs had a greater ability to differentiate than Alde-Low MSCs in in vitro culture. Transplantation of Alde-High MSCs into fractured mouse femurs enabled early repair of tissues and rapid bone substitution. Alde-High MSCs were also more responsive to hypoxia than Alde-Low MSCs, with the upregulation of Flt-1, CXCR4, and Angiopoietin-2. Thus, MSCs with a high ALDH activity might serve as an effective therapeutic tool for healing fractures within a short period of time.