Multiple myeloma (MM) patients express pleiotrophin (PTN), a secreted protein that binds CD138, and it is found at high levels in the serum of MM patients. We have discovered a novel mechanism leading to blood vessel formation by tumor cells. First, we purified human monocytes (CD14+) and cultured on collagen I, collagen IV, fibronectin, or laminin-coated dishes. The cells incubated on collagen I (but not on the other 3 proteins) with mCSF+ PTN formed tube-like structures with positive staining for Flk-1. Complex lines consisting of multiple rows of elongated Flk-1+ cells in contact with each other were found. In contrast, monocytes incubated with only mCSF or on other substrates remained in separated positions. We also cloned human monocytic THP-1 cells with PTN sense or antisense whole sequencing DNA. We examined expression by RT-PCR of endothelial cell markers Flk-1, Tie-2, and vWf and monocyte markers c-fms and CD68. THP-1 cells infected with PTN sense strand expressed high amounts of Flk-1, Tie-2, and vWf similar to that found in human coronary artery endothelial cells and lost expression of c-fms and CD68. Next, we cultured THP1 monocytes with human myeloma RPMI8226 cells in transwell cultures, serum derived from MM patients with high serum levels of PTN, cell lines lacking PTN expression, or normal controls lacking serum PTN. The THP-1 cells exposed to the MM cell line or MM serum showed expression of endothelial markers. The expression of endothelial markers was blocked by adding anti-PTN antibody. We also determined whether PTN could also stimulate differentiation of bone marrow stem cells into endothelial cells. The stem cells were derived from bone marrow by CD34 selection, and were stimulated with either m-CSF or PTN alone or a combination of m-CSF and PTN or no treatment for 7 days. Real-time PCR analysis showed that the m-CSF and PTN combination markedly increased endothelial cell marker expression and decreased monocyte marker (CD68 and c-fms) expression in this stem cell population. When induced with PTN alone, the stem cells exhibited slightly increasing expression of endothelial markers. These experiments define a previously unrecognized novel mechanism leading to angiogenesis in cancer patients: the transdifferentiation of monocytes into endothelial cells by a factor highly produced by tumor cells. They also suggest a potential new specific target to inhibit angiogenesis—pleiotrophin—which may have profound clinical implications.