Most of our understanding of the development and phenotype of alternatively activated macrophages (AAMs) has been obtained from studies investigating the response of bone marrow- and peritoneal-derived cells to IL-4 or IL-13 stimulation. Comparatively little is known about the development of AAMs in the lungs, and how the complex signals associated with pulmonary inflammation influence the AAM phenotype. Here, we use Nippostrongylus brasiliensis to initiate AAM development and define the dynamics of surface molecules, gene expression, and cell function of macrophages isolated from lung tissue at different times postinfection (PI). Initially, lung macrophages take on a foamy phenotype, up-regulate MHC and costimulatory molecules, express reduced levels of TNF and IL-12, and undergo proliferation. Cells isolated between days 8 and 15 PI adopt a dense, granular phenotype and exhibit reduced levels of costimulatory molecules and elevated levels of programmed death ligand-1 (PDL-1) and PDL-2 and an increase in IL-10 expression. Functionally, AAMs isolated on days 13-15 PI demonstrate an enhanced capacity to take up and sequester antigen. However, these same cells did not mediate antigen-specific T cell proliferation and dampened the proliferation of CD3/CD28-activated CD4+ T cells. These data indicate that the alternative activation of macrophages in the lungs, although initiated by IL-4/IL-13, is a dynamic process that is likely to be influenced by other immune and nonimmune factors in the pulmonary environment.