During infections and inflammation, plasmacytoid dendritic cells (pDCs) are the most potent type I interferon (IFN-I)-producing cells. However, the developmental origin of pDCs and the signals dictating pDC generation remain incompletely understood. Here, we report a synergistic role for IFN-I and Flt3 ligand (FL) in pDC development from common lymphoid progenitors (CLPs). Both conventional DCs (cDCs) and pDCs were generated from CLPs in response to FL, whereas pDC generation required higher concentrations of FL and concurrent IFN-I signaling. An absence of IFN-I receptor, impairment of IFN-I signaling, or neutralization of IFN-I significantly impeded pDC development from CLPs. Furthermore, FL induced IFN-I expression in CLPs, which in turn induced Flt3 up-regulation that facilitated survival and proliferation of CLPs, as well as their differentiation into pDCs. Collectively, these results define a critical role for the FL/IFN-I/Flt3 axis in pDC differentiation from CLPs.