N-myristoyltransferase (NMT) exists in two isoforms, NMT1 and NMT2, that catalyze myristoylation of various proteins crucial in signal transduction, cellular transformation, and oncogenesis. We have recently demonstrated that NMT1 is essential for the early development of mouse embryo. In this report, we have demonstrated that an invariant consequence of NMT1 knock out is defective myelopoesis. Suppressed macrophage colony forming units were observed in M-CSF-stimulated bone marrow cells from heterozygous (+/-) Nmt1-deficient mice. Homozygous (-/-) Nmt1-deficient mouse embryonic stem cells resulted in drastic reduction of macrophages when stimulated to differentiate by M-CSF. Furthermore, to understand the requirement of NMT1 in the monocytic differentiation we investigated the role of NMT, pp60c-Src (NMT substrate) and heat shock cognate protein 70 (inhibitor of NMT), during PMA-induced differentiation of U937 cells. Src kinase activity and protein expression increased during the differentiation process along with regulation of NMT activity by hsc70. NMT1 knock down in PMA treated U937 cells showed defective monocytic differentiation. We report in this study novel observation that regulated total NMT activity and NMT1 is essential for proper monocytic differentiation of the mouse bone marrow cells.