The immune responses of type 2 T helper cells (Th2) play an important role in asthma and promote the differentiation of alternatively activated (M2) macrophages. M2 macrophages have been increasingly understood to contribute to Th2 immunity. We hypothesized that M2 macrophages are altered in asthma and modulate Th2 responses. The aim of this study was to characterize the phenotype and function of human monocyte-derived M2 and bronchoalveolar lavage fluid (BALF) macrophages from healthy control subjects and subjects with asthma. Phenotypic characteristics and effector function of M2 macrophages were examined using monocyte-derived and BALF macrophages obtained from subjects with asthma (n = 28) and healthy volunteers (n = 9) by flow cytometry and quantitative PCR. Resting monocyte-derived (M0) and M2 macrophages were generated by the addition of macrophage colony–stimulating factor or macrophage colony–stimulating factor plus IL-4, respectively. M2 macrophage cytokine expression and their impact on dendritic and CD4⁺ T cell activation were examined in vitro. High levels of CD206 and major histocompatibility complex class II expression identify macrophages with an M2 phenotype that are increased 2.9-fold in the BALF of subjects with asthma compared with control subjects. M2 macrophages have elevated IL-6, IL-10, and IL-12p40 production compared with conventional macrophages and modulate dendritic and CD4⁺ T cell interactions. Histamine receptor 1 and E-cadherin expression identify M2 macrophage subsets associated with increased airflow obstruction. M2 macrophages have a distinct cell surface and effector phenotype and are found in increased numbers in subjects with asthma. These findings suggest that M2 macrophages may play an important role in allergic asthma through their bidirectional interactions with immune and structural cells, and inflammatory mediators.