© 2018 The Author(s). Differentiation of circulating monocytes into tissue-bound or tissue-resident macrophages is a critical regulatory process affecting host defense and inflammation. However, the regulatory signaling pathways that control the differentiation of monocytes into specific and distinct functional macrophage subsets are poorly understood. Herein, we demonstrate that monocyte-to-macrophage differentiation is controlled by the Protein Phosphatase, Mg2+/Mn2+-dependent 1A (PPM1A). Genetic manipulation experiments demonstrated that overexpression of PPM1A attenuated the macrophage differentiation program, while knockdown of PPM1A expression accelerated the ability of monocytes to differentiate into macrophages. We identify imiquimod and Pam3CSK4 as two Toll-like receptor agonists that induce PPM1A expression, and show that increased expression of PPM1A at the onset of differentiation impairs cellular adherence, reduces expression of inflammatory (M1) macrophage-specific markers, and inhibits the production of inflammatory cytokines. Our findings reveal PPM1A as a negative threshold regulator of M1-type monocyte-to-macrophage differentiation, establishing it as a key phosphatase that orchestrates this program.