Monocytes/macrophages (Mo) appear to play a critical role in the initiation and progression of atherosclerotic lesions. In this study, we characterized in vitro-differentiated embryonic stem (ES) cell macrophages as a model system for studying atherosclerosis-associated Mo functions. Using immunofluorescence staining and Western analysis, we demonstrate that ES Mo express typical macrophage cell surface markers, as well as the known receptors for modified forms of low density lipoprotein (LDL), including the Mo scavenger receptors (SR-A type I and type II), CD36, and CD68. Differentiated ES Mo specifically bind and degrade 125I-labeled acetylated LDL with high affinity, and their incubation with acetylated LDL (15 microg/mL) for 48 hours produces characteristic "foamy" Mo, as visualized by oil red O staining. ES Mo also express matrix-degrading metalloproteinases (MMP-3, MMP-9), which have been implicated in collagen breakdown in the fibrous cap of atherosclerotic plaques, and secrete cytokines (tumor necrosis factor-alpha, interleukin-6) in response to inflammatory stimuli. Transfection experiments, using a green fluorescent protein reporter gene, driven by the myeloid-specific promoter, CD11b, demonstrated that ES Mo can also be used to study macrophage-restricted gene expression in vitro. Taken together, these data demonstrate that ES Mo exhibit many properties typical of arterial lesion macrophages. Its ease of genetic manipulation makes it an attractive system for investigations of macrophage functions in vitro.