Type I interferons (IFNs) are potent regulators of both innate and adaptive immunity. All type I IFNs bind to the same heterodimeric cell surface receptor composed of IFN-alpha receptor (IFNAR-1) and IFN-alpha/beta receptor (IFNAR-2) polypeptides. This study revealed that type I IFN receptor levels vary considerably on hematopoietic cells, with monocytes and B cells expressing the highest levels. Overnight treatment of peripheral blood mononuclear cells (PBMCs) with IFN-alpha2b or IFN-beta led to increased expression on monocytes and B cells of surface markers commonly associated with activated antigen-presenting cells (APCs), such as CD38, CD86, MHC class I, and MHC class II. Five-day exposure of adherent monocytes to granulocyte-macrophage colony-stimulating factor (GM-CSF) plus IFN-alpha or IFN-beta caused the development of potent allostimulatory cells with morphology similar to that of myeloid dendritic cells (DCs) obtained from culture with GM-CSF and interleukin-4 (IL-4) but with distinct cell surface marker profiles and activity. In contrast to IL-4-derived DCs, IFN-alpha-derived DCs were CD14+, CD1a-, CD123+, CD32+, and CD38+ and expressed high levels of CD86 and MHC class II. Development of these cells was completely blocked by an antibody to IFNAR-1. Furthermore, activity of the type I IFN-derived DC in a mixed lymphocyte reaction (MLR) was consistently more potent than that of IL-4-derived DCs, especially at high responder/stimulator ratios. This MLR activity was abrogated by the addition of anti-IFNAR-1 antibody at the start of the DC culture. In contrast, there was no effect of anti-IFNAR-1 on IL-4-derived DCs, indicating that this is a distinct pathway of DC differentiation. These results suggest a potential role for anti-IFNAR-1 immunotherapy in autoimmune diseases, such as systemic lupus erythematosus (SLE), in which the action of excessive type I IFN on B cells and myeloid DCs may play a role in disease pathology.