Macrophages play crucial roles in many human disease processes. However, obtaining large numbers of primary cells for study is often difficult. We describe 2D and 3D methods for directing human induced pluripotent stem cells (hiPSCs) into macrophages (iMACs). iMACs generated in 2D culture showed functional similarities to human primary monocyte-derived M2-like macrophages, and could be successfully polarized into a M1-like phenotype. Both M1- and M2-like iMACs showed phagocytic activity and reactivity to endogenous or exogenous stimuli. In contrast, iMACs generated by a 3D culture system showed mixed M1- and M2-like functional characteristics. 2D-iMACs from patients with fibrodysplasia ossificans progressiva (FOP), an inherited disease with progressive heterotopic ossification driven by inflammation, showed prolonged inflammatory cytokine production and higher Activin A production after M1-like polarization, resulting in dampened responses to additional LPS stimulation. These results demonstrate a simple and robust way of creating hiPSC-derived M1- and M2-like macrophage lineages, while identifying macrophages as a source of Activin A that may drive heterotopic ossification in FOP.