Macrophages undergo plasma membrane fusion and cell multinucleation to form multinucleated giant cells (MGCs) such as osteoclasts in bone, Langhans giant cells (LGCs) as part of granulomas or foreign-body giant cells (FBGCs) in reaction to exogenous material. While osteoclast multinucleation is a prerequisite for vertebrate bone homeostasis, the effector function resulting from LGC and FBGC multinucleation is less well-defined. More generally, how multinucleation per se contributes to functional specialization of mature mononuclear macrophages remains poorly understood in humans. Here, we integrated comparative transcriptomics with functional assays in purified mature mononuclear and multinucleated human osteoclasts, LGCs and FBGCs. Strikingly, in all three types of MGCs, multinucleation causes a pronounced down-regulation of mononuclear phagocyte identity. We show enhanced lysosome-mediated intracellular iron homeostasis promoting MGC formation. The transition from mononuclear to multinuclear state is accompanied by cell specialization specific to each polykaryon. Enhanced phagocytic and mitochondrial function associate with FBGCs and osteoclasts, respectively. Moreover, only B7-H3 (CD276)-expressing human LGCs can form granuloma-like clusters in vitro, suggesting that LGC multinucleation potentiates T cell activation. These findings demonstrate how cell-cell fusion and multinucleation reset human macrophage identity as part of an advanced maturation step that confers MGC-specific functionality.