Plasmacytoid dendritic cells (pDCs) are a unique DC subset that specializes in the production of type I interferons (IFNs). pDCs promote antiviral immune responses and have been implicated in the pathogenesis of autoimmune diseases that are characterized by a type I IFN signature. However, pDCs can also induce tolerogenic immune responses. In this Review, we summarize recent progress in the field of pDC biology, focusing on the molecular mechanisms that regulate the development and functions of pDCs, the pathways involved in their sensing of pathogens and endogenous nucleic acids, their functions at mucosal sites, and their roles in infection, autoimmunity and cancer.