Dendritic cells (DCs) comprise heterogeneous subsets of professional antigen-presenting cells, linking innate and adaptive immunity. Analysis of DC subsets has been hampered by a lack of specific DC markers and reliable quantitation assays. We characterised the immunophenotype and functional characteristics of psoriatic arthritis (PsA)-derived and rheumatoid arthritis (RA)-derived myeloid DCs (mDCs) and plasmacytoid DCs (pDCs) to evaluate their potential role in arthritis. Circulating peripheral blood (PB) pDC numbers were significantly reduced in PsA patients (P = 0.0098) and RA patients (P = 0.0194), and mDCs were significantly reduced in RA patients (P = 0.0086) compared with healthy controls. The number of circulating mDCs in RA PB was significantly inversely correlated to C-reactive protein (P = 0.021). The phenotype of both DC subsets in PsA PB and RA PB was immature as compared with healthy controls. Moreover, CD62L expression was significantly decreased on both mDCs (PsA, P = 0.0122; RA, P = 0.0371) and pDCs (PsA, P = 0.0373; RA, P = 0.0367) in PB. Both mDCs and pDCs were present in PsA synovial fluid (SF) and RA SF, with the mDC:pDC ratio significantly exceeding that in matched PB (PsA SF, P = 0.0453; RA SF, P = 0.0082). pDCs isolated from RA SF and PsA SF displayed an immature phenotype comparable with PB pDCs. RA and PsA SF mDCs, however, displayed a more mature phenotype (increased expression of CD80, CD83 and CD86) compared with PB mDCs. Functional analysis revealed that both SF DC subsets matured following toll-like receptor stimulation. pDCs from PB and SF produced interferon alpha and tumour necrosis factor alpha on TLR9 stimulation, but only SF pDCs produced IL-10. Similarly, mDCs from PB and SF produced similar tumour necrosis factor alpha levels to TLR2 agonism, whereas SF mDCs produced more IL-10 than PB controls. Circulating DC subset numbers are reduced in RA PB and PsA PB with reduced CD62L expression. Maturation is incomplete in the inflamed synovial compartment. Immature DCs in SF may contribute to the perpetuation of inflammation via sampling of the inflamed synovial environment, and in situ presentation of arthritogenic antigen.