Human umbilical cord blood mesenchymal stem cells (hUCB-MSCs) are used in tissue repair and regeneration; however, the mechanisms involved are not well understood. We investigated the hair growth-promoting effects of hUCB-MSCs treatment to determine whether hUCB-MSCs enhance the promotion of hair growth. Furthermore, we attempted to identify the factors responsible for hair growth. The effects of hUCB-MSCs on hair growth were investigated in vivo, and hUCB-MSCs advanced anagen onset and hair follicle neogeneration. We found that hUCB-MSCs coculture increased the viability and up-regulated hair induction-related proteins of human dermal papilla cells (hDPCs) in vitro. A growth factor antibody array revealed that secretory factors from hUCB-MSCs are related to hair growth. Insulin-like growth factor binding protein-1 (IGFBP-1) and vascular endothelial growth factor (VEGF) were increased in co-culture medium. Finally, we found that IGFBP-1, through the colocalization of an IGF-1 and IGFBP-1, had positive effects on cell viability; VEGF secretion; expression of alkaline phosphatase (ALP), CD133, and β-catenin; and formation of hDPCs 3D spheroids. Taken together, these data suggest that hUCB-MSCs promote hair growth via a paracrine mechanism.