Nurse cells are defined as those that provide for the development of other cells. We report here, that in vitro, human monocyte-derived macrophages can behave as nurse cells with functional capabilities that include de novo generation of CD4+ T-lymphocytes and a previously unknown small cell with monocytoid characteristics. We named these novel cells "self-renewing monocytoid cells" (SRMC), because they could develop into nurse macrophages that produced another generation of SRMC. SRMC were not detectable in blood. Their transition to nurse behavior was characterized by expression of CD10, a marker of thymic epithelium and bone marrow stroma, typically absent on macrophages. Bromodeoxyuridine labeling and immunostaining for cdc6 expression confirmed DNA synthesis within nurse macrophages. T-cell excision circles were detected in macrophages, along with expression of pre-T-cell receptor alpha and recombination activating gene 1, suggesting that genetic recombination events associated with generation of the T-cell receptor were occurring in these cells. SRMC expressed CCR5, the coreceptor for R5 HIV-1 isolates, and were highly susceptible to HIV-1 entry leading to productive infection. While expressing HIV-1, SRMC could differentiate into nurse macrophages that produced another generation of HIV-1-expressing SRMC. The infected nurse macrophage/SRMC cycle could continue in vitro for multiple generations, suggesting it might represent a mechanism whereby HIV-1 can maintain persistence in vivo. HIV-1 infection of nurse macrophages led to a decline in CD4+ T-cell production. There was severe, preferential loss of the CCR5+ CD4+ T-cell subpopulation. Confocal microscopy revealed individual HIV-1-expressing nurse macrophages simultaneously producing both HIV-1-expressing SRMC and non-expressing CD3+ cells, suggesting that nurse macrophages might be a source of latently infected CD4+ T-cells. Real-time PCR experiments confirmed this by demonstrating 10-fold more HIV-1-genome-harboring T-cells, than virus-expressing ones. These phenomena have far-reaching implications, and elicit new perspectives regarding HIV pathogenesis and T-cell and hematopoietic cell development.