Human and mouse plasmacytoid dendritic cells have been shown to correspond to a specialized cell population that produces large amounts of type I interferons in response to viruses, the so-called natural interferon-producing cells. As a result, intensive investigation is now focused on the potential functions of plasmacytoid dendritic cells in both innate and adaptive immunity. Here we review recent progress on the characterization of plasmacytoid dendritic cell origin, development, migration and function in immunity and tolerance, as well as their effect on human diseases.