ABSTRACT: Plasmacytoid dendritic cells (pDCs) competent to make type I interferon were rigorously defined as a Ly-6C(+) and CD11c(Lo) subset of the B220(+)CD19(-) CD43(+)CD24(Lo) bone marrow (BM) Fraction A. Otherwise similar Ly6C(-) cells expressed the natural killer (NK) markers DX5 and NK1.1. pDCs represented a stable, discrete, and long-lived population. Stem cells and early lymphoid progenitors (ELPs), but not prolymphocytes, were effective precursors of pDCs, and their differentiation was blocked by ligation of Notch receptors. Furthermore, pDCs were present in the BM of RAG1(-/-), CD127/IL-7Ra(-/-), and Pax5(-/-) mice. pDCs in RAG1/GFP knock-in mice could be subdivided, and immunoglobulin D(H)-J(H) rearrangements, as well as transcripts for the B-lineage-related genes Pax5, mb1/CD79a, ebf, and Bcl11a, were identified only in the green fluorescent protein-positive (GFP(+)) pDC1 subset. All pDCs expressed terminal deoxynucleotidyl transferase (TdT), the ETS transcription factor Spi-B, the nuclear factor-kappaB transcription factor RelB, toll-like receptor 9 (TLR9), and interferon consensus sequence binding protein (ICSBP)/interferon regulatory factor 8 (IRF-8) transcripts; lacked CD16 and granulocyte colony-stimulating factor receptor (G-CSFR); and were uniformly interleukin-7 receptor alpha (IL-7Ralpha(-)) AA4.1(Lo), CD27(-), Flk-2(Lo), c-Kit(-), DX-5(-), and CD11b(-), while CD4 and CD8alpha were variable. GFP(+) pDC1 subset was less potent than GFP(-) pDC2s in T allostimulation and production of tumor necrosis factor alpha (TNFalpha), interferon alpha (IFNalpha), and interleukin-6 (IL-6), while only pDC2s made IFNgamma and IL-12 p70. Thus, 2 functionally specialized subsets of pDCs arise in bone marrow from progenitors that diverge from B, T, and NK lineages at an early stage.