Chronic infection by Echinococcus granulosus results in establishment of fluid-filled cysts (hydatid cysts) in liver or lungs of infected hosts, which can escape destruction by the host immune system for long periods. This study explores the modulation by hydatid cyst fluid of the in vitro human monocyte to dendritic cell (DC) transition induced by granulocyte–macrophage colony-stimulating factor (GM-CSF) and interleukin-4 (IL-4). Addition of the fluid to adherent peripheral blood monocytes cultured in GM-CSF/IL-4 stimulates release of prostaglandin E2 (PGE2) and IL-6. Exposure of differentiating DC to the fluid during the 7-day culture in GM-CSF/IL-4 impairs their subsequent ability to secrete IL-12, IL-6 or PGE2 in response to lipopolysaccharide (LPS) stimulation. This inhibition is not dependent on the initial release of PGE2. The presence of hydatid cyst fluid also modulates the phenotype of the cells generated during culture, resulting in increased CD14 expression and decreased expression of CD1a. Finally, hydatid fluid can stimulate predifferentiated DC to mature, as evidenced by release of IL-12 and IL-6, and by up-regulation of class II major histocompatibility complex and CD86. The possible role of dendritic cell modulation in regulating the host immune response to hydatid cysts is discussed.