We found that human monocytes differentiate into macrophages (Mp) by GM-CSF and M-CSF. The Mp induced by GM-CSF and M-CSF are different in their morphology, cell surface antigen expression and functions. In the course of that study, we found that IL-4 modulate the differentiation of monocytes induced by GM-CSF and M-CSF. IL-4 alone did not induce the proliferation and differentiation of monocytes. IL-4, however, inhibited the proliferative response of monocytes to GM-CSF. When monocytes were incubated with GM-CSF and IL-4 simultaneously, the cells recovered were non-adherent, non-phagocytic, and did not form rosette with EA. The cells were also negative in nonspecific esterase and showed an appearance of dendritic cells (DC). The DC-like cells expressed CD1, DR, DQ and CD11c, but not CD14, CD71 and 710F. The cells showed strong APC activity in alogeneic and autologous mixed lymphocyte reaction (MLR). When monocytes were incubated with M-CSF and IL-4, TRAP positive multinucleated giant cells appeared. Taken together, these results suggest that IL-4 is a principal factor that control the differential development of human monocytes into DC and multinucleated giant cells.