CD137 is a member of the TNFR family, and reverse signaling through the CD137 ligand, which is expressed as a cell surface transmembrane protein, costimulates or activates APCs. CD137 and CD137 ligand are expressed on small subsets of bone marrow cells. Activation of bone marrow cells through CD137 ligand induces proliferation, colony formation and an increase in cell numbers. Compared with total bone marrow cells, the small subpopulation of progenitor cells that express no lineage markers but express CD117 cells (or Lin−, CD117+ cells) responds with the same activities to CD137 ligand signaling, but at a significantly enhanced rate. Concomitantly to proliferation, the cells differentiate to CFU granulocyte-macrophage and CFU macrophage, and then to monocytes and macrophages but not to granulocytes or dendritic cells. Hematopoietic progenitor cells differentiated in the presence of CD137 protein display enhanced phagocytic activity, secrete high levels of IL-10 but little IL-12 in response to LPS, and are incapable of stimulating T cell proliferation. These data demonstrate that reverse CD137 ligand signaling takes place in hematopoietic progenitor cells, in which it induces proliferation, an increase in cell numbers, colony formation, and differentiation toward monocytes and macrophages.