Distinct macrophage subsets populate the developing embryo and fetus in distinct waves. However little is known about the functional differences between in utero macrophage populations or how they might contribute to fetal and neonatal immunity. Here we tested the innate immune response of mouse macrophages derived from the embryonic yolk sac and from fetal liver. When isolated from liver or lung, CD11bHI fetal liver derived macrophages responded to the TLR4 agonist LPS by expressing and releasing inflammatory cytokines. However F4/80HI macrophages from the yolk sac did not respond to LPS treatment. While differences in TLR4 expression did not appear to explain these data, F4/80HI macrophages had much lower NLRP3 inflammasome expression compared to CD11bHI macrophages. Gene expression profiling also demonstrated LPS-induced expression of inflammatory genes in CD11bHI macrophages, but not in F4/80HI cells. Genes expressed in LPS-treated CD11bHI macrophages were more likely to contain predicted NF-κB binding sites in their promoter regions. Our data show that CD11bHI macrophages derived from fetal liver are the major pro-inflammatory cells in the developing fetus. These findings could have important implications in better understanding the fetal inflammatory response and the unique features of neonatal immunity.