Neutropenia as a consequence of bone marrow failure, severe infections, or intensive chemotherapy is frequently associated with life-threatening sepsis. Ex vivo expansion of CD34(+) stem cells has been shown to generate apparently functional neutrophils, and the use of autologous ex vivo-expanded cells can reduce the duration of neutropenia. Nonetheless, the principal antimicrobial capabilities of such cells, and thus their true therapeutic potential, is unknown. Using established protocols, we derived mature neutrophils from normal human adult bone marrow (BM) CD34(+) cells and compared them with freshly isolated peripheral blood neutrophils (PBN). Despite functional similarities between ex vivo-differentiated neutrophils (EDN) and PBN in assays of respiratory burst and phagocytosis, EDN showed marked impairment in their ability to kill both Escherichia coli and Streptococcus pneumoniae compared with PBN. We found that EDN were able to detect (through Toll-like receptor 2 [TLR2], TLR4, and CD14 expression), phagocytose, and mount a respiratory burst to microorganisms. EDN, however, were unable to release neutrophil elastase in response to formyl-met-leu-phe and showed a significantly reduced expression of neutrophil elastase, cathepsin G myeloperoxidase, and LL-37/human cathelicidin protein 18 (hCAP18) as determined by Western blotting. Ultrastructural analysis was consistent with a failure of normal granule development in EDN. Neutrophils derived from BM CD34(+) cells may therefore provide apparently functional cells as assessed by common methodologies; however, important deficiencies may still limit their therapeutic potential. The results presented here suggest additional key tests that such cells may need to undergo prior to clinical use and highlight the potential challenges of using ex vivo modified stem cells in therapeutic settings. Disclosure of potential conflicts of interest is found at the end of this article.