The peritoneal wash of BALB/c or C57BL/6 mice contains two populations of macrophages that differ in their level of expression of MHC class II (MHC II). Although both populations efficiently phagocytose bacteria in vivo, only the MHC II(lo) population is effective at phagocytosing apoptotic cells in vivo and only the MHC II(hi) population is effective at presenting Ag to T cells in vitro. Soon after induction of a peritoneal infection both of these macrophage populations are lost from the peritoneal wash fraction. Blood monocytes then enter the inflamed peritoneum and develop into new peritoneal macrophages. Whether these monocytes develop into MHC II(lo) or into MHC II(hi) macrophages is crucially dependent on the cytokine IL-10, which is transiently elevated in the peritoneal wash during the early phase of infection. Monocytes from CD45.1 animals transferred early in infection when the IL-10 concentration is high into congenic CD45.2 recipients develop into the MHC II(lo) macrophage population. Monocytes transferred later, when the IL-10 concentration has fallen, develop into the MHC II(hi) population. In infected IL-10-deficient animals monocytes fail to develop into the MHC II(lo) population but can be induced to do so by exogenous application of IL-10. Finally, high numbers of wild-type monocytes injected into IL-10R1-deficient animals develop into MHC II(lo) macrophages and were able by a bystander effect to induce the differentiation of the endogenous monocytes to the same fate.