During hematopoiesis, myeloid progenitor cells give rise to granulocytes and macrophages. To study the role for ICSBP, a hematopoietic cell-specific transcription factor in myeloid cell development, the gene was introduced into myeloid progenitor cells established from ICSBP^−/− mice. ICSBP retrovirus-transduced cells differentiated into mature macrophages with phagocytic activity, which coincided with the induction of specific target DNA binding activity. Similar to macrophages in vivo, ICSBP-transduced cells were growth arrested, expressed many macrophage-specific genes, and responded to macrophage activation signals. Contrary to this, ICSBP transducion led to repression of granulocyte-specific genes and inhibited G-CSF-mediated granulocytic differentiation in these and other myeloid progenitor cells. Together, ICSBP has a key role in the myeloid cell lineage selection and macrophage maturation.