Eosinophils are multi-functional leucocytes that play a role in inflammatory processes including allergy and infection. Although bone marrow (BM) inflammatory cells are the main source of eosinophil-basophil (Eo/B) differentiation-inducing cytokines, a recent role has been demonstrated for cytokine induction through Toll-like receptor (TLR)-mediated signalling in BM progenitors. Having previously demonstrated that cord blood (CB) progenitors induce Eo/B colony-forming units (CFU) after lipopolysaccharide (LPS) stimulation, we sought to investigate the intracellular mechanisms by which LPS induces Eo/B differentiation. Freshly isolated CD34-enriched human CB cells were stimulated with LPS (and/or pharmacological inhibitors) and assessed for alterations in haematopoietic cytokine receptor expression and signalling pathways by flow cytometry, Eo/B CFU in methylcellulose cultures, and cytokine secretion using Luminex assays. The LPS stimulation resulted in a significant increase in granulocyte-macrophage colony-stimulating factor (GM-CSF)-responsive, as opposed to interleukin-5-responsive, Eo/B CFU, which also correlated with significant increases in CD34(+) cell GM-CSFRα expression. Functionally, CB CD34(+) cells secrete abundant amounts of GM-CSF following LPS stimulation, via a p38 mitogen-activated protein kinase (MAPK)-dependent mechanism; this secretion was responsible for Eo/B CFU formation ex vivo, as shown by antibody blockade. We show for the first time that LPS stimulation of CB progenitor cells results in autocrine activation of p38 MAPK-dependent GM-CSF secretion facilitating Eo/B differentiation ex vivo. This work provides evidence that early life exposure to products of bacterial agents can modulate Eo/B differentiation, representing a novel mechanism by which progenitor cells can respond to microbial stimuli and so affect immune and inflammatory responses.