Iron is required for monocyte/macrophage differentiation of HL‐60 leukaemia cells. Differentiation requires induction of the cyclin‐dependent kinase inhibitor p21 (WAF1/CIP1), and cell cycle arrest at the G1/S checkpoint. With iron depletion, p21 induction and differentiation are blocked. To establish the roles of iron and p21 in normal monocyte/macrophage differentiation, we examined generation of dendritic cells (DCs) and macrophages from peripheral monocytes. Monocytes were cultured with interleukin 4 and granulocyte–macrophage colony‐stimulating factor (GM‐CSF), then treated with lipopolysaccharide to produce DCs or with M‐CSF to produce macrophages. Iron deprivation was induced by desferrioxamine (DF). Monocyte‐derived DCs had characteristic phenotype and morphology, and stimulated proliferation of naïve allogeneic T lymphocytes. In contrast, DCs generated under iron deprivation were phenotypically undifferentiated and did not stimulate T cells. Similarly, macrophages expressed a characteristic phenotype and morphology, and phagocytosed latex beads, but macrophages generated under iron deprivation failed to develop a mature phenotype and had impaired phagocytosis. Iron deprivation blocked induction of p21 (WAF1/CIP1) expression in both DC and macrophage cultures. Furthermore, p21 antisense oligonucleotides, but not sense oligonucleotides, inhibited both DC and macrophage differentiation. These data indicate that a key role of iron in haematopoiesis is to support induction of p21 which, in turn, is required for DC and macrophage differentiation.