It is well established that Ly6Chi monocytes develop from common monocyte progenitors (cMoPs) and reside in the bone marrow (BM) until they are mobilized into the circulation. In our study, we found that BM Ly6Chi monocytes are not a homogenous population, as current data would suggest. Using computational analysis approaches to interpret multidimensional datasets, we demonstrate that BM Ly6Chi monocytes consist of two distinct subpopulations (CXCR4hi and CXCR4lo subpopulations) in both mice and humans. Transcriptome studies and in vivo assays revealed functional differences between the two subpopulations. Notably, the CXCR4hi subset proliferates and is immobilized in the BM for the replenishment of functionally mature CXCR4lo monocytes. We propose that the CXCR4hi subset represents a transitional premonocyte population, and that this sequential step of maturation from cMoPs serves to maintain a stable pool of BM monocytes. Additionally, reduced CXCR4 expression on monocytes, upon their exit into the circulation, does not reflect its diminished role in monocyte biology. Specifically, CXCR4 regulates monocyte peripheral cellular activities by governing their circadian oscillations and pulmonary margination, which contributes toward lung injury and sepsis mortality. Together, our study demonstrates the multifaceted role of CXCR4 in defining BM monocyte heterogeneity and in regulating their function in peripheral tissues.