Abstract Osteosarcoma (OS) metastasizes to the lung and there is a link between tumor-promoting M2 macrophage content and poorer patient survival. Conversely, high M1 content correlates with improved survival. M2 macrophages are immunosuppressive, contribute to tumor progression and metastasis, and can be induced by various stimuli in the tumor microenvironment, including exosomes (Exo). Exo are small 40–150 nm vesicles that are involved in inter-cellular communication, and contribute to tumor progression, increased tumor survival and immune evasion. Because of the link between M2 content and inferior patient survival, we evaluated the effect of Exo from non-metastatic K7 OS cells and the metastatic subline K7M3 on macrophage phenotype and function. Incubating MHS mouse alveolar macrophage cells with K7M3 Exo induced mRNA expression of IL10, TGFB2, IL1rα, and CCL22, (markers of M2 macrophages), and decreased phagocytosis, efferocytosis and macrophage-mediated tumor cell killing. In contrast, Exo from non-metastatic K7 or 3T3 normal fibroblast cells did not inhibit phagocytosis, efferocytosis or macrophage-mediated tumor cell killing. Our data suggest that the Exo from metastatic OS cells can modulate cellular signaling of tumor associated macrophages, thereby promoting the M2 phenotype and inhibiting their phagocytic and cytotoxic abilities. Identifying the factors within Exo from metastatic OS cells and the mechanisms responsible for Exo communication between metastatic OS cells and macrophages could reveal new therapeutic targets and opportunities to improve the treatment of patients with metastatic disease in the lung.