ABSTRACT: Carbon monoxide (CO) is generated by heme oxygenase (HO), and HO-1 is highly induced in monocytes and macrophages upon stimulation. Monocytes differentiate into macrophages, including pro-inflammatory (M1) and anti-inflammatory (M2) cells, in response to environmental signals. The present study investigated whether CO modulates macrophage differentiation and polarization, by applying the CO-releasing molecule-3 (CORM-3). Results showed that murine bone marrow cells are differentiated into macrophages by CORM-3 in the presence of macrophage colony-stimulating factor. CORM-3 increases expressions of macrophage markers, including F4/80 and CD11b, and alters the cell morphology into elongated spindle-shaped cells, which is a typical morphology of M2 cells. CORM-3 upregulates the expressions of genes and molecules involved in M2 polarization and M2 phenotype markers, such as STAT6, PPARγ, Ym1, Fizz1, arginase-1, and IL-10. However, exposure to CORM-3 inhibits the iNOS expression, suggesting that CO enhances macrophage differentiation and polarization toward M2. Increased HO-1 expression is observed in differentiated macrophages, and CORM-3 further increases this expression. Hemin, an HO-1 inducer, results in increased macrophage differentiation, whereas the HO-1 inhibitor zinc protoporphyrin IX inhibits differentiation. In addition, CORM-3 increases the proportion of macrophages in peritoneal exudate cells and enhances the expression of HO-1 and arginase-1 but inhibits iNOS. Taken together, these results suggest that the abundantly produced CO in activated macrophages enhances proliferation, differentiation, and polarization toward M2. It will probably help clear apoptotic cells, resolve inflammation, and promote wound healing and tissue remodeling.