Differentiation of functional dendritic cells (DCs) critically depends on the microenvironment. DCs differentiate in hypoxic tumor sites and inflamed or damaged tissue. Because local concentrations of adenosine reach high physiologically relevant levels in these conditions, we assessed the expression of adenosine receptors and the effect of their activation on differentiation of human monocytes and mouse peritoneal macrophages and hematopoietic progenitor cells (HPCs) into myeloid DCs. Stimulation of adenosine receptors skews DC differentiation toward a distinct cell population characterized by expression of both DC and monocyte/macrophage cell surface markers. Pharmacologic analysis and experiments with cells from A(2B) adenosine receptor knockout mice identified A(2B) receptor as the mediator of adenosine effects on DCs. Unlike normal myeloid DCs, adenosine-differentiated DCs have impaired allostimulatory activity and express high levels of angiogenic, pro-inflammatory, immune suppressor, and tolerogenic factors, including VEGF, IL-8, IL-6, IL-10, COX-2, TGF-beta, and IDO. They promoted tumor growth if injected into tumors implanted in mice. Using adenosine desaminase knockout animals, we showed that DCs with proangiogenic phenotype are highly abundant under conditions associated with elevated levels of extracellular adenosine in vivo. Adenosine signaling through A(2B) receptor is an important factor of aberrant DC differentiation and generation of tolerogenic, angiogenic, and proinflammatory cells.