Plasmacytoid dendritic cells (pDCs) are characterized as type I interferon-producing cells that engage endosomal toll-like receptors (TLRs) and exclusively express sialic acid binding Ig-like lectin (Siglec)-H. However, their role in vivo remains unclear. Here we report a critical role for pDCs in the regulation of inflammation and T cell immunity in vivo by using gene-targeted mice with a deficiency of Siglec-H and conditional ablation of pDCs. pDCs were required for inflammation triggered by a TLR ligand as well as by bacterial and viral infections. pDCs controlled homeostasis of effector and regulatory CD4+ T cells. Upon antigenic stimulation and microbial infection, pDCs suppressed the induction of CD4+ T cell responses and participated in the initiation of CD8+ T cell responses. Furthermore, Siglec-H appeared to modulate the function of pDCs in vivo. Thus, our findings highlight previously unidentified roles of pDCs and the regulation of their function for the control of innate and adaptive immunity.