Dendritic cells (DCs) are professional APCs and potent stimulators of naive T cells. Since DCs have the ability to immunize or tolerize T cells they are unique candidates for use in immunotherapy. Our laboratory has discovered that a naturally processed self-peptide from apolipoprotein E, Ep1.B, induces DC-like morphology and surface marker expression in a murine monocytic cell line (PU5-1.8), human monocytic cell line (U937), murine splenocytes, and human peripheral blood monocytes. Microscopy and flow cytometric analysis revealed that Ep1.B-treated cells display decreased adherence to plastic and increased aggregation, dendritic processes, and expression of DC surface markers, including DEC-205, CD11c, B7.1, and B7.2. These effects were observed in both PU5-1.8 cells and splenocytes from various mouse strains including BALB/c, C57BL/6, NOD/Lt, and C3H/HeJ. Coadministration of Ep1.B with OVA antigenic peptide functions in dampening specific immune response to OVA. Ep1.B down-regulates proliferation of T cells and IFN-gamma production and stimulates IL-10 secretion in immunized mice. Ep1.B-induced differentiation resulted in the activation of PI3K and MAPK signaling pathways, including ERK1/2, p38, and JNK. We also found that NF-kappaB, a transcription factor essential for DC differentiation, is critical in mediating the effects of Ep1.B. Ep1.B-induced differentiation is independent of MyD88-dependent pathway of TLR signaling. Cumulatively, these findings suggest that Ep1.B acts by initiating a signal transduction cascade in monocytes leading to their differentiation into DCs.