Tumor-associated macrophages (TAMs) display heterogeneous phenotypes. Yet the exact tissue cues that shape macrophage functional diversity are incompletely understood. Here we discriminate, spatially resolve and reveal the function of five distinct macrophage niches within malignant and benign breast and colon tissue. We found that SPP1 TAMs reside in hypoxic and necrotic tumor regions, and a novel subset of FOLR2 tissue resident macrophages (TRMs) supports the plasma cell tissue niche. We discover that IL4I1 macrophages populate niches with high cell turnover where they phagocytose dying cells. Significantly, IL4I1 TAMs abundance correlates with anti-PD1 treatment response in breast cancer. Furthermore, NLRP3 inflammasome activation in NLRP3 TAMs correlates with neutrophil infiltration in the tumors and is associated with poor outcome in breast cancer patients. This suggests the NLRP3 inflammasome as a novel cancer immunetherapy target. Our work uncovers context-dependent roles of macrophage subsets, and suggests novel predictive markers and macrophage subset-specific therapy targets.