To determine whether monocytes can be generated from CD34+ hematopoietic progenitors in large numbers, cord blood CD34+ cells were first expanded for 3-10 days in X-VIVO 10 medium supplemented with FCS, stem cell factor (SCF), thrombopoietin (TPO), and Flt-3 Ligand (Flt-3L), and then differentiated in IMDM medium supplemented with FCS, SCF, Flt-3L, IL-3 and M-CSF for 7-14 days. These two step cultures resulted in up to a 600-fold mean increase of total CD14+ cells. Using this approach, two subpopulations of monocytes were obtained: CD14+CD16(-) and CD14++CD16+ occurring at 2:1 ratio. 1.25(OH)2 Vitamin D3 added to the differentiation medium altered this ratio by decreasing proportion of CD14++CD16+ monocytes. In comparison to CD14+CD16(-), the CD14++CD16+ cells showed different morphology and an enhanced expression of CD11b, CD33, CD40, CD64, CD86, CD163, HLA-DR, and CCR5. Both subpopulations secreted TNF and IL-12p40 but little or no IL-10. CD14++CD16+ monocytes released significantly more IL-12p40, were better stimulators of MLR but showed less S. aureus phagocytosis. These subpopulations are clearly different from those present in the blood and may be novel monocyte subsets that represent different stages in monocyte differentiation with distinct biological function.