Mycobacterium bovis bacillus Calmette-Guerin (BCG) is given to millions of neonates in developing countries as a vaccine against Mycobacterium tuberculosis; however, little is known about the initiation of response in neonatal dendritic cells (DCs) to BCG. To address this issue, the interaction of BCG with human cord blood monocyte-derived DCs was studied. We showed that BCG could promote cord blood monocyte-derived DC maturation by up-regulation of CD80, CD83, CD86, CD40, and MHC class II molecules and down-regulation of mannose receptor. BCG was able to induce similar levels of tumor necrosis factor-alpha and IL-10 but no bioactive IL-12p70 production from cord blood DCs as from adult blood DCs. Functionally BCG-treated cord blood DCs had higher ability to induce mixed lymphocyte reaction than non-BCG-treated cord blood DCs. Both non-BCG-treated and BCG-treated cord blood DCs efficiently induced a high level of IL-10, medium level of interferon-gamma, but little IL-4 production by cord blood naïve CD4+ T cells. Heat shock protein 65, a key component of BCG, had no effect on cord blood DC maturation in terms of CD86, MHC class II, and mannose receptor up-regulation. During the BCG-induced maturation process of cord blood DCs, nuclear transcription factor Rel-B was up-regulated and cytosolic Rel-B down-regulated with cytosolic IkappaB alpha and beta degradation. These results suggest that BCG can promote cord blood monocyte-derived DC maturation, and that the mechanism is through the up-regulation of nuclear Rel-B secondary to the degradation of cytosolic IkappaB alpha and beta.