Blood monocytes are precursors of dendritic cells, macrophages, and osteoclasts. They are a heterogeneous cell population with differences in size, phenotype, and function. Although monocytes maintain several tissue-specific populations of immune cells in homeostasis, their contribution to populations of dendritic cells, macrophages, and osteoclasts is significantly increased in inflammation. Identification of a growing number of functionally different subsets of cells within populations of monocyte-derived immune cells has recently put monocyte heterogeneity into sharp focus. Here, we summarize recent findings in monocyte heterogeneity and their differentiation into dendritic cells, macrophages, and osteoclasts. We also discuss these advances in the context of the formation of functionally different monocyte-derived subsets of dendritic cells, macrophages, and osteoclasts.