Stem cell therapies have had tremendous potential application for many diseases in recent years. However, the tumorigenic properties of stem cells restrict their potential clinical application; therefore, strategies for reducing the tumorigenic potential of stem cells must be established prior to transplantation. We have demonstrated that syngeneic transplantation of embryonic stem cells (ESCs) provokes an inflammatory response that involves the rapid recruitment of bone marrow-derived macrophages (BMDMs). ESCs are able to prevent mature macrophages from macrophage colony-stimulating factor (M-CSF) withdrawal-induced apoptosis, and thus prolong macrophage lifespan significantly by blocking various apoptotic pathways in an M-CSF-independent manner. ESCs express and secrete IL-34, which may be responsible for ESC-promoted macrophage survival. This anti-apoptotic effect of ESCs involves activation of extracellular signal-regulated kinase (ERK)1/2 and PI3K/Akt pathways and thus, inhibition of ERK1/2 and PI3K/AKT activation decreases ESC-induced macrophage survival. Functionally, ESC-treated macrophages also showed a higher level of phagocytic activity. ESCs further serve to polarize BMDMs into M2-like macrophages that exhibit most tumor-associated macrophage phenotypic and functional features. ESC-educated macrophages produce high levels of arginase-1, Tie-2, and TNF-alpha, which participate in angiogenesis and contribute to teratoma progression. Our study suggests that induction of M2-like macrophage activation is an important mechanism for teratoma development. Strategies targeting macrophages to inhibit teratoma development would increase the safety of ESC-based therapies, inasmuch as the depletion of macrophages completely inhibits ESC-induced angiogenesis and teratoma development.