Especially when exposed to inflammatory stimuli, endothelial cells (EC) have been shown to promote the maturation of monocytes into dendritic cells (DC) and the long-term proliferation of CD34+ cells by constitutive cytokine production and direct cellular contact. We therefore hypothesized that cytokine-stimulated EC would induce hematopoietic progenitor cells to develop into mature dendritic cells. To test this theory, human CD34+ cells derived from cord blood or leukapheresis products were cultured with a monolayer of either interleukin (IL)-1beta, IL-4, or tumor necrosis factor (TNF)-alpha-stimulated human umbilical cord EC. The cells in suspension were analyzed weekly over a period of 6 weeks. IL-1beta supported cell expansion, whereas IL-4 had no effect on cell expansion or DC differentiation. Only TNF-alpha-stimulated EC induced the development of mature, allostimulatory DC with a high expression of CD83, HLA-DR, CD1a, and costimulatory molecules like CD80 and CD86. Acute myeloid leukemia cells from the cell line Kasumi-1 also developed DC-like features when cocultured with TNF-alpha-stimulated EC. Direct contact between endothelial and progenitor cells increased the number of developing DC. Cell cycle analysis and apoptosis studies demonstrated a reduced G2M fraction, an increased S fraction, and a decrease in TNF-alpha-dependent apoptosis of DC developing in the presence of endothelial cells. As shown by electron and confocal microscopic studies, intimate interactions between EC and DC occurred, resulting in the internalization of the developing DC within the EC monolayer and a bidirectional exchange of proteins. We conclude that, via the action of TNF-alpha, inflamed human endothelium can induce CD34+ and leukemic cells to differentiate into dendritic cells.