We previously showed that granulocyte-macrophage colony-stimulating factor (GM-CSF) and macrophage colony-stimulating factor (M-CSF) stimulate the differentiation of human monocytes into two phenotypically distinct types of macrophages. However, in vivo, not only CSF but also many other cytokines are produced under various conditions. Those cytokines may modulate the differentiation of monocytes by CSFs. In the present study, we showed that CD14+ adherent human monocytes can differentiate into CD1+relB+ dendritic cells (DC) by the combination of GM-CSF plus interleukin-4 (IL-4) and that they differentiate into tartrate-resistant acid phosphatase (TRAP)-positive osteoclast-like multinucleated giant cells (MGC) by the combination of M-CSF plus IL-4. However, the monocyte-derived DC were not terminally differentiated cells; they could still convert to macrophages in response to M-CSF. Tumor necrosis factor-alpha (TNF-alpha) stimulated the terminal differentiation of the DC by downregulating the expression of the M-CSF receptor, cfms mRNA, and aborting the potential to convert to macrophages. In contrast to IL-4, interferon-gamma (IFN-gamma) had no demonstrable effect on the differentiation of monocytes. Rather, IFN- gamma antagonized the effect of IL-4 and suppressed the DC and MGC formation induced by GM-CSF + IL-4 and M-CSF + IL-4, respectively. Taken together, these results provide a new aspect to our knowledge of monocyte differentiation and provide evidence that human monocytes are flexible in their differentiation potential and are precursors not only of macrophages but also of CD1+relB+DC and TRAP-positive MGC. Such a diverse pathway of monocyte differentiation may constitute one of the basic mechanisms of immune regulation.