Unrestricted somatic stem cells (USSC) from human cord blood display a broad differentiation potential for ectodermal, mesodermal, and endodermal cell types. The molecular basis for these stem cell properties is unclear and unlike embryonic stem cells (ESC) none of the major stem cell factors OCT4, SOX2, and NANOG exhibits significant expression in USSC. Here, we report that these key stem cell genes hold an epigenetic state in between that of an ESC and a terminally differentiated cell type. DNA methylation analysis exhibits partial demethylation of the regulatory region of OCT4 and a demethylated state of the NANOG and SOX2 promoter/enhancer regions. Further genome-wide DNA methylation profiling identified a partially demethylated state of the telomerase gene hTERT. Moreover, none of the pluripotency factors exhibited a repressive histone signature. Notably, SOX2 exhibits a bivalent histone signature consisting of the opposing histone marks dimeH3K4 and trimeH3K27, which is typically found on genes that are "poised" for transcription. Consequently, ectopic expression of OCT4 in USSC led to rapid induction of expression of its known target gene SOX2. Our data suggest that incomplete epigenetic repression and a "poised" epigenetic status of pluripotency genes preserves the USSC potential to be able to react adequately to distinct differentiation and reprogramming cues.