Tolerogenic dendritic cells (DCs) may be valuable in transplantation for silencing immune reaction. Macrophage colony-stimulating factor (M-CSF)/IL-4 induces differentiation of cord blood (CB) monocytes into DCs (M-DCs) with tolerogenic phenotype/function. We assessed whether factors produced by tolerogenic DCs could modulate hematopoiesis. TGF-beta1 added to CB M-DC cultures induced bona fide DC morphology (TGF-M-DCs), similar to that of DCs generated with TGF-beta and granulocyte-macrophage colony-stimulating factor (GM-CSF)/IL-4 (TGF-GM-DCs). Of conditioned media (CM) produced from TGF-M-DCs, TGF-GM-DCs, M-DCs, and GM-DCs, TGF-M-DC CM was the only one that enhanced SCF, Flt3 ligand, and TPO expansion of myeloid progenitor cells ex vivo. This effect was blocked by neutralizing anti-M-CSF Ab, but protein analysis of CM suggested that M-CSF alone was not manifesting enhanced expansion of myeloid progenitors. LPS-stimulated TGF-M-DCs induced T-cell tolerance/anergy as effectively as M-DCs. TGF-M-DCs secreted significantly lower concentrations of progenitor cell inhibitory cytokines and were less potent in activating T cells than TGF-GM-DCs. Functional differences between TGF-M-DCs and TGF-GM-DCs included enhanced responses to LPS-induced ERK, JNK, and P38 activation in TGF-M-DCs and their immune suppressive-skewed cytokine release profiles. TGF-M-DCs appear unique among culture-generated DCs in their capability for silencing immunity while promoting expansion of myeloid progenitors, events that may be of therapeutic value.