Macrophages are present in most vertebrate tissues and comprise widely dispersed and heterogeneous cell populations with different functions. They are key players in health and disease, acting as phagocytes during immune defense and mediating trophic, maintenance, and repair functions. Although it has been possible to study some of the molecular processes involved in human macrophage function, it has proved difficult to apply genetic engineering techniques to primary human macrophages. This has significantly hampered our ability to interrogate the complex genetic pathways involved in macrophage biology and to generate models for specific disease states. An off-the-shelf source of human macrophages that is amenable to the vast arsenal of genetic manipulation techniques would, therefore, provide a valuable tool in this field. We present an optimized protocol that allows for the generation of macrophages from human induced pluripotent stem cells (iPSCs) in vitro. These iPSC-derived macrophages (iPSC-DMs) express human macrophage cell surface markers, including CD45, 25F9, CD163, and CD169, and our live-cell imaging functional assay demonstrates that they exhibit robust phagocytic activity. Cultured iPSC-DMs can be activated to different macrophage states that display altered gene expression and phagocytic activity by the addition of LPS and IFNg, IL4, or IL10. Thus, this system provides a platform to generate human macrophages carrying genetic alterations that model specific human disease and a source of cells for drug screening or cell therapy to treat these diseases.