Dendritic cells (DC) are bone marrow-derived cells that are specialized to take up, process and present antigen, and have the capacity to stimulate resting T cells in the primary immune response. DC are a unique population that is likely to derive from a myeloid precursor cell. DC differentiation from bone marrow precursors in enhanced by the cytokines GM-CSF and tumor necrosis factor-alpha. In contrast, it has been proposed that thymic DC and T cells arise from a common stem cell, and that these DC play a specific role in the negative selection of thymic T cells. A number of post-bone marrow differentiation stages can be defined phenotypically and functionally. Undifferentiated DC have very active endocytic pathways, including receptor-mediated endocytosis involving a mannose/beta glucan receptor, and macropinocytosis of soluble antigen. In contrast, later stages of maturation are associated with a decreased ability to take up and process antigen, and increasing expression of major histocompatibility complex, adhesion and costimulatory molecules. Finally, activation of DC for full antigen-presenting cell function can be identified by the expression of CD28 ligands. The inflammatory site in rheumatoid arthritis is a human model of DC differentiation in response to a chronic antigenic stimulus. The features of this DC model are discussed.