Macrophage activation comprises a continuum of functional states critically determined by cytokine microenvironment. Activated macrophages have been functionally grouped according to their response to pro-Th1/proinflammatory stimuli [lipopolysaccharide, IFNγ, granulocyte macrophage colony-stimulating factor (GM-CSF); M1] or pro-Th2/anti-inflammatory stimuli [interleukin (IL)-4, IL-10, M-CSF; M2]. We report that folate receptor β (FRβ), encoded by the FOLR2 gene, is a marker for macrophages generated in the presence of M-CSF (M2), but not GM-CSF (M1), and whose expression correlates with increased folate uptake ability. The acquisition of folate uptake ability by macrophages is promoted by M-CSF, maintained by IL-4, prevented by GM-CSF, and reduced by IFNγ, indicating a link between FRβ expression and M2 polarization. In agreement with in vitro data, FRβ expression is detected in tumor-associated macrophages (TAM), which exhibit an M2-like functional profile and exert potent immunosuppressive functions within the tumor environment. FRβ is expressed, and mediates folate uptake, by CD163⁺ CD68⁺ CD14⁺ IL-10–producing TAM, and its expression is induced by tumor-derived ascitic fluid and conditioned medium from fibroblasts and tumor cell lines in an M-CSF–dependent manner. These results establish FRβ as a marker for M2 regulatory macrophage polarization and indicate that folate conjugates of therapeutic drugs are a potential immunotherapy tool to target TAM. [Cancer Res 2009;69(24):9395–403]