Stem Cell Educator (SCE) therapy is a novel clinical approach for the treatment of type 1 diabetes and other autoimmune diseases. SCE therapy circulates the isolated patient's blood mononuclear cells (e.g., lymphocytes and monocytes) through an apheresis machine, co-cultures the patient's blood mononuclear cells with adherent cord blood-derived stem cells (CB-SC) in the SCE device, and then returns these "educated" immune cells to the patient's blood. Exosomes are nano-sized extracellular vesicles between 30‒150 nm existing in all biofluid and cell culture media. To further explore molecular mechanisms underlying SCE therapy and determine the actions of exosomes released from CB-SC, we investigate which cells phagocytize these exosomes during the treatment with CB-SC. By co-culturing Dio-labeled CB-SC-derived exosomes with human peripheral blood mononuclear cells (PBMC), we found that CB-SC-derived exosomes were predominantly taken up by human CD14-positive monocytes, leading to the differentiation of monocytes into type 2 macrophages (M2), with spindle-like morphology and expression of M2-associated surface molecular markers. Here, we present a protocol for the isolation and characterization of CB-SC-derived exosomes and the protocol for the co-culture of CB-SC-derived exosomes with human monocytes and the monitoring of M2 differentiation.