Myeloid progenitors lose their potential to generate neutrophils when they adopt the mononuclear phagocyte lineage. The mechanism underlying this lineage restriction remains unknown. We here report that the protein expression of IRF8, an essential transcription factor for the development of dendritic cells (DCs) and monocytes, sharply increases at the monocyte-DC progenitor (MDP) stage and remains high in common monocyte progenitors (cMoPs). Irf8^−/− MDPs and cMoPs accumulate but fail to efficiently generate their downstream populations, instead giving rise to neutrophils in vivo. IRF8 physically interacts with the transcription factor C/EBPα and prevents its binding to chromatin in MDPs and cMoPs, blocking the ability of C/EBPα to stimulate transcription and neutrophil differentiation. A partial inhibition of C/EBP activity in Irf8^−/− haematopoietic progenitors alleviates the neutrophil overproduction in vivo. Thus, IRF8 not only bestows monocyte and DC differentiation potential upon mononuclear phagocyte progenitors but also restrains these progenitors from differentiating into neutrophils.