To study the early stages of development from stem cells of the CD56+ cell population [which includes natural killer (NK) cells], granulocyte-colony stimulating factor-mobilized peripheral blood CD34+ cells from healthy donors were sorted to >99% purity and cultured in the presence of stem cell factor and interleukin (IL)-2. After 3 weeks in culture, the majority of cells acquired CD33, with or without human leukocyte antigen-DR and CD14. In 20 stem cell donors tested, 8.7 +/- 8.8% of cells were CD56+. Two major CD56+ subsets were identified: CD56(bright), mainly CD33- cells (7+/-10%, n=11) with large, granular lymphocyte morphology, and CD56dim, mainly CD33+ (2.5+/-2, n=11) cells with macrophage morphology. The CD56bright population had cytoplasmic granzyme A but lacked killer inhibitory receptor, suggesting they were immature NK cells. The CD56dim, CD33+, population lacked NK markers. They may represent a minor subset of normal monocytes at a developmental stage comparable with the rare CD56+ CD33+ hybrid myeloid/NK cell leukemia. Consistent with a monocyte nature, CD56dimCD33+ proliferated and produced a variety of cytokines upon lipopolysaccharide stimulation, including IL-8, IL-6, monocyte chemoattractant protein-1, and macrophage-derived chemokine but not interferon-gamma. In a short-term cytotoxicity assay, they failed to kill but powerfully inhibited the proliferation of the NK-resistant cell line P815. The generation of CD56+ cells was negatively regulated by hyaluronic acid and IL-4, indicating that extracellular matrix may play an important role in the commitment of CD34+ cells into CD56 myeloid and lymphoid lineages.