Alveolar macrophages (AMs) play critical roles in maintaining lung homeostasis and orchestrating the immune responses. Although the essential factors known for AM development have been identified, currently an optimal in vitro culture system that can be used for studying the development and functions of AMs is still lacking. In this study, we report the development of an optimized culture system for generating AM-like cells from adult mouse bone marrow and fetal liver cells on in vitro culture in the presence of a combination of GM-CSF, TGF-β, and peroxisome proliferator–activated receptor γ (PPAR-γ) agonist rosiglitazone. These AM-like cells expressed typical AM surface markers sialic acid–binding Ig-like lectin-F (Siglec-F), CD11c, and F4/80, and AM-specific genes, including carbonic anhydrase 4 (Car4), placenta-expressed transcript 1 (Plet1), eosinophil-associated RNase A family member 1 (Ear1), cell death–inducing DNA fragmentation factor A–like effector c (Cidec), and cytokeratin 19 (Krt19). Similar to primary AMs, the AM-like cells expressed alternative macrophage activation signature genes and self-renewal genes. Moreover, this culture system could be used for expansion of bronchoalveolar lavage fluid–derived AMs in vitro. The AM-like cells generated from bone marrow resembled the expanded bronchoalveolar lavage fluid–derived AMs in inflammatory responses and phagocytic activity. More importantly, these AM-like cells could be obtained in sufficient numbers that allowed genetic manipulation and functional analysis in vitro. Taken together, we provide a powerful tool for studying the biology of AMs.