glial cells missing (gcm) is the primary regulator of glial cell fate in Drosophila. In addition, gcm has a role in the differentiation of the plasmatocyte/macrophage lineage of hemocytes. Since mutation of gcm causes only a decrease in plasmatocyte numbers without changing their ability to convert into macrophages, gcm cannot be the sole determinant of plasmatocyte/macrophage differentiation. We have characterized a gcm homolog, gcm2. gcm2 is expressed at low levels in glial cells and hemocyte precursors. We show that gcm2 has redundant functions with gcm and has a minor role promoting glial cell differentiation. More significant, like gcm, mutation of gcm2 leads to reduced plasmatocyte numbers. A deletion removing both genes has allowed us to clarify the role of these redundant genes in plasmatocyte development. Animals deficient for both gcm and gcm2 fail to express the macrophage receptor Croquemort. Plasmatocytes are reduced in number, but still express the early marker Peroxidasin. These Peroxidasin-expressing hemocytes fail to migrate to their normal locations and do not complete their conversion into macrophages. Our results suggest that both gcm and gcm2 are required together for the proliferation of plasmatocyte precursors, the expression of Croquemort protein, and the ability of plasmatocytes to convert into macrophages.