Circulating CD14+ monocytes are precursors of phagocytes, such as macrophages and dendritic cells. Here we report primitive cells with a fibroblast-like morphology derived from human peripheral blood CD14+ monocytes that can differentiate into several distinct mesenchymal cell lineages. We named this cell population monocyte-derived mesenchymal progenitor (MOMP). MOMPs were obtained in vitro from human peripheral blood mononuclear cells cultured on fibronectin in the presence of fetal bovine serum alone as a source of growth factors. MOMPs had a unique molecular phenotype-CD14+CD45+CD34+type I collagen+-and showed mixed morphologic and molecular features of monocytes and endothelial and mesenchymal cells. MOMPs were found to be derived from a subset of circulating CD14+ monocytes, and their differentiation required that they bind fibronectin and be exposed to one or more soluble factors derived from peripheral blood CD14- cells. MOMPs could be expanded in culture without losing their original phenotype for up to five passages. The induction of MOMPs to differentiate along multiple limb-bud mesodermal lineages resulted in the expression of genes and proteins specific for osteoblasts, skeletal myoblasts, chondrocytes, and adipocytes. Our findings represent the first evidence that human circulating CD14+ monocytes are a source of progenitors that exhibit mesenchymal cell differentiation.