Endothelial progenitor cells (EPCs) seem to be a promising tool for cell therapy of acute myocardial infarction, but their nature is still unclear. We show here that EPCs obtainable from peripheral blood (PB) derive from the adhesion-related selection in culture of a subset of CD14+ cells, which, when assessed by the highly-sensitive antibody-conjugated magnetofluorescent liposomes (ACMFL) technique, were found to express CD34. These CD14+CD34^low cells represented a variable proportion at individual level of CD14+ cells, ranging from 0.6% to 8.5% of all peripheral-blood leukocytes, and constituted the dominant population among circulating KDR+ cells. By using the ACMFL technique, virtually all CD14+ cells present in the bone marrow were found to be CD14+CD34^low double-positive cells. EPCs, as well as purified circulating CD14+CD34^low cells, exhibited high expression of embryonic stem cell (SC) markers Nanog and Oct-4, which were downregulated in a STAT3-independent manner when they differentiated into endothelial cells (ECs). Moreover, circulating CD14+CD34^low cells, but not CD14+CD34− cells, proliferated in response to SC growth factors, and exhibited clonogenicity and multipotency, as shown by their ability to differentiate not only into ECs, but also into osteoblasts, adipocytes, or neural cells. The results of this study may reconcile apparently contradictory data of the literature, showing the generation of PB-derived EPCs from either CD34+ or CD14+ cells. We suggest that the use of this previously unrecognized population of circulating CD14+CD34^low cells, which exhibit both phenotypic and functional features of SCs, may be useful in improving cell-based therapies of vascular and tissue damage.