Iron is essential for living organisms and the disturbance of iron homeostasis is associated with altered immune function. Additionally, bacterial infections can cause major complications in instances of chronic iron overload, such as patients with transfusion-dependent thalassemia. Monocytes and macrophages play important roles in maintaining systemic iron homoeostasis and in defense against invading pathogens. However, the effect of iron overload on the function of monocytes and macrophages is unclear. We elucidated the effects of chronic iron overload on human monocytic cell line (THP-1) and THP-1 derived macrophages (TDM) by continuously exposing them to high levels of iron (100 μM) to create I-THP-1 and I-TDM, respectively. Our results show that iron overload did not affect morphology or granularity of I-THP-1, but increased the granularity of I-TDM. Bactericidal assays for non-pathogenic E. coli DH5α, JM109 and pathogenic P. aeruginosa all revealed decreased efficiency with increasing iron concentration in I-TDM. The impaired P. aeruginosa killing ability of human primary monocyte derived macrophages (hMDM) was also found when cells are cultured in iron contained medium. Further studies on the bactericidal activity of I-TDM revealed lysosomal dysfunction associated with the inhibition of lysosomal acidification resulting in increasing lysosomal pH, the impairment of post-translational processing of cathepsins (especially cathepsin D), and decreased autophagic flux. These findings may explain the impaired innate immunity of thalassemic patients with chronic iron overload, suggesting the manipulation of lysosomal function as a novel therapeutic approach.