Differentiation of tissue monocytes into DCs is a critical phase in the development of a competent immune system. We show that in a nicotinic environment, while human monocytes differentiate into DCs (henceforth called nicDCs) with a typical morphology, they display unique phenotype and cytokine profile that adversely affect their function. Despite an increased capacity for receptor-dependent antigen uptake, nicDCs do not express CD1a and fail to fully up-regulate MHCs, molecules essential for their antigen-presenting function. Additionally, in response to bacterial antigen LPS, maturing nicDCs hardly express the chemotactic cytokine receptor 7 required for their entry into lymphatic vessels. Furthermore, in parallel with their differential expression of costimulatory molecules CD80 and CD86 and lack of IL-12, nicDCs display profoundly reduced Th1 promoting capacity. These findings thus indicate that nicotine impedes the development of cell-mediated immunity by skewing DC differentiation. These effects of nicotinic environment on DC differentiation may contribute to the increased risks of respiratory tract infection and various cancers in smokers.