Few methods are available to regenerate articular cartilage defects in patients with osteoarthritis. We aimed to assess the safety and efficacy of articular cartilage regeneration by a novel medicinal product composed of allogeneic human umbilical cord blood-derived mesenchymal stem cells (hUCB-MSCs). Patients with Kellgren-Lawrence grade 3 osteoarthritis and International Cartilage Repair Society (ICRS) grade 4 cartilage defects were enrolled in this clinical trial. The stem cell-based medicinal product (a composite of culture-expanded allogeneic hUCB-MSCs and hyaluronic acid hydrogel [Cartistem]) was applied to the lesion site. Safety was assessed by the World Health Organization common toxicity criteria. The primary efficacy outcome was ICRS cartilage repair assessed by arthroscopy at 12 weeks. The secondary efficacy outcome was visual analog scale (VAS) score for pain on walking. During a 7-year extended follow-up, we evaluated safety, VAS score, International Knee Documentation Committee (IKDC) subjective score, magnetic resonance imaging (MRI) findings, and histological evaluations. Seven participants were enrolled. Maturing repair tissue was observed at the 12-week arthroscopic evaluation. The VAS and IKDC scores were improved at 24 weeks. The improved clinical outcomes were stable over 7 years of follow-up. The histological findings at 1 year showed hyaline-like cartilage. MRI at 3 years showed persistence of the regenerated cartilage. Only five mild to moderate treatment-emergent adverse events were observed. There were no cases of osteogenesis or tumorigenesis over 7 years. The application of this novel stem cell-based medicinal product appears to be safe and effective for the regeneration of durable articular cartilage in osteoarthritic knees. Stem Cells Translational Medicine 2017;6:613-621.