Kupffer cells are the largest population of tissue macrophages. They are predominantly distributed in the lumen of hepatic sinusoids and exhibit endocytic activity against blood-borne materials entering the liver. Macrophage colony-stimulating factor and other growth factors regulate Kupffer cell differentiation in the fetal and adult period. Because of the unique attributes of tissue, Kupffer cells play essential roles not only in host defense but also in the homeostatic responses of tissue. Macrophage scavenger receptors and heme oxygenase are expressed in Kupffer cells from an early stage of ontogeny. Scavenger receptors are involved not only in the lipid metabolism but also in the bactericidal mechanism. Heme oxygenase in Kupffer cells is essential to the production of bilirubin. In this review, the developmental mechanism and functional activities of Kupffer cells are described. Evidence suggests that Kupffer cells represent a distinct cell population with unique differentiation mechanisms, metabolic functions, and responsiveness to inflammatory agents.