Cytopenias are an important clinical problem associated with inflammatory disease and infection. We show that specialized phagocytes that internalize red blood cells develop in Toll-like receptor 7 (TLR7)-driven inflammation. TLR7 signaling caused the development of inflammatory hemophagocytes (iHPCs), which resemble splenic red pulp macrophages but are a distinct population derived from Ly6Chi monocytes. iHPCs were responsible for anemia and thrombocytopenia in TLR7-overexpressing mice, which have a macrophage activation syndrome (MAS)-like disease. Interferon regulatory factor 5 (IRF5), associated with MAS, participated in TLR7-driven iHPC differentiation. We also found iHPCs during experimental malarial anemia, in which they required endosomal TLR and MyD88 signaling for differentiation. Our findings uncover a mechanism by which TLR7 and TLR9 specify monocyte fate and identify a specialized population of phagocytes responsible for anemia and thrombocytopenia associated with inflammation and infection. Copyright 2019 The Authors, some rights reserved; exclusive licensee American Association for the Advancement of Science. No claim to original U.S. Government Works.