Monocytes acquire a dendritic cell (DC) phenotype when cultured with GM-CSF and IL-4. By contrast, CSF-1 is a potent inducer of monocyte-to-macrophage differentiation. Increasing evidence indicates that DC development is impaired in conditions characterized by CSF-1 overproduction, including pregnancy, trauma, and diverse malignancies. To study this, we have exposed newly established monocyte-derived DC cultures to conditions of CSF-1 excess. As a consequence, differentiation is skewed toward a unique intermediate phenotype, which we have termed DC-M. Such cells exhibit macrophage-like morphology with impaired allostimulatory capacity, altered cytokine production, and a distinctive cell surface immunophenotype. In light of the emerging role of caspase activation during macrophage differentiation, the activity of caspases 3, 8, and 9 was examined in DC and DC-M cultures. It is striking that DC-M cultures exhibit a delayed and progressive increase in activation of all three caspases, associated with depolarization of mitochondrial membrane potential. Furthermore, when DC-M cultures were supplemented with an inhibitor of caspase 8 or caspase 9, impairment of DC differentiation by CSF-1 was counteracted. To investigate upstream regulators of caspase activation in DC-M cultures, experiments were performed using inhibitors of proximal CSF-1 receptor signaling. These studies demonstrated that the PI-3K inhibitors, wortmannin and LY294002, antagonize the ability of CSF-1 to inhibit DC differentiation and to promote caspase activation. Together, these data identify a novel, PI-3K-dependent pathway by which CSF-1 directs delayed caspase activation in monocytes and thereby modulates DC differentiation.