The zebrafish is a useful model organism for developmental and genetic studies. The morphology and function of zebrafish myeloid cells were characterized. Adult zebrafish contain 2 distinct granulocytes, a heterophil and a rarer eosinophil, both of which circulate and are generated in the kidney, the adult hematopoietic organ. Heterophils show strong histochemical myeloperoxidasic activity, although weaker peroxidase activity was observed under some conditions in eosinophils and erythrocytes. Embryonic zebrafish have circulating immature heterophils by 48 hours after fertilization (hpf). A zebrafish myeloperoxidase homologue (myeloid-specific peroxidase; mpx) was isolated. Phylogenetic analysis suggested it represented a gene ancestral to the mammalian myeloperoxidase gene family. It was expressed in adult granulocytes and in embryos from 18 hpf, first diffusely in the axial intermediate cell mass and then discretely in a dispersed cell population. Comparison of hemoglobinized cell distribution, mpx gene expression, and myeloperoxidase histochemistry in wild-type and mutant embryos confirmed that the latter reliably identified a population of myeloid cells. Studies in embryos after tail transection demonstrated that mpx- and peroxidase-expressing cells were mobile and localized to a site of inflammation, indicating functional capability of these embryonic granulocytes. Embryonic macrophages removed carbon particles from the circulation by phagocytosis. Collectively, these observations have demonstrated the early onset of zebrafish granulopoiesis, have proved that granulocytes circulate by 48 hpf, and have demonstrated the functional activity of embryonic granulocytes and macrophages. These observations will facilitate the application of this genetically tractable organism to the study of myelopoiesis.