Umbilical cord blood (UCB) is an extremely attractive source of stem cells for the treatment of various benign and malignant hematological and non-hematological disorders. To facilitate the preservation of these stem cells, 10 % dimethylsulfoxide (DMSO) is widely used as cryoprotectant in cord blood banks. But it is found to be toxic at this concentration with the result of serious side effects in recipients after infusion of DMSO-cryopreserved cells. Evaluation of viability and functionality of cryopreserved hematopoietic stem cells is needed with either inclusion of nontoxic additives alone or with reduced DMSO concentration. We assessed the post thawing viability of UCB stem cells in the freezing medium containing disaccharides (sucrose or trehalose) alone and in combination with reduced amount i.e. 2 % DMSO by trypan blue staining. The functionally active progenitor cells content of the optimized media was then evaluated and compared with 5% DMSO by a colony forming unit assay using methylcellulose based media. The freezing solution containing 0.2 M trehalose with 2 % DMSO came out to be superior in the evaluation of viability and generation of hematopoietic colonies of erythroid and myeloid lineage than 5 % DMSO alone. While the percentage of viability was lower than 2 % DMSO, as observed in the medium containing 0.2 M trehalose or sucrose alone, with poor outcome of generation of myeloid lineage based colonies. Our study results suggest that trehalose (0.2M) with the inclusion of reduced concentration of DMSO(2%) can better replace 5%DMSO rather than complete removal of DMSO from the freezing medium.