McGreevey, a Democrat in his first term as governor, said Wednesday such research should not be limited by politics.
"This isn't an abstract academic debate. People are suffering today and what we offer them is hope," McGreevey said, The New York Times reported. McGreevey has included $6.5 million in his budget for an institute to be built in New Brunswick.
President Bush has banned federal funds from being used for research that would produce embryonic stem-cell lines other than those in existence in August 2001.
However, former first lady Nancy Reagan last week called for stem-cell research that could eventually help Alzheimer's patients, such as former President Ronald Reagan. The presumptive Democratic Party nominee for president, Sen. John Kerry, D-Mass., has long been a supporter of stem-cell research.
Stem cells are found in human embryos, placentas and umbilical cords. Some researchers claim the limitation on stem-cell lines available for study delays medical breakthroughs in treatments for several injuries and illnesses.
Collection of the cells can result in the destruction of an embryo, leading many anti-abortion rights groups to say the practice is unethical.