Although physiological development of human lymphoid subsets has become well documented in humanized mice, in vivo development of human myeloid subsets in a xenotransplantation setting has remained unevaluated. Therefore, we investigated in vivo differentiation and function of human myeloid subsets in NOD/SCID/IL2rγ(null) (NSG) mouse recipients transplanted with purified lineage(-)CD34(+)CD38(-) cord blood hematopoietic stem cells. At 4-6 mo posttransplantation, we identified the development of human neutrophils, basophils, mast cells, monocytes, and conventional and plasmacytoid dendritic cells in the recipient hematopoietic organs. The tissue distribution and morphology of these human myeloid cells were similar to those identified in humans. After cytokine stimulation in vitro, phosphorylation of STAT molecules was observed in neutrophils and monocytes. In vivo administration of human G-CSF resulted in the recruitment of human myeloid cells into the recipient circulation. Flow cytometry and confocal imaging demonstrated that human bone marrow monocytes and alveolar macrophages in the recipients displayed intact phagocytic function. Human bone marrow-derived monocytes/macrophages were further confirmed to exhibit phagocytosis and killing of Salmonella typhimurium upon IFN-γ stimulation. These findings demonstrate the development of mature and functionally intact human myeloid subsets in vivo in the NSG recipients. In vivo human myelopoiesis established in the NSG humanized mouse system may facilitate the investigation of human myeloid cell biology including in vivo analyses of infectious diseases and therapeutic interventions