Plasmacytoid dendritic cells (pDCs) play an important role in innate and adaptive immunity, prompting interest in mechanisms controlling the production of this lineage of cells. Notch signaling via one of the Notch ligands, delta-like 1 (delta-1), influences the hematopoietic development of several lymphoid and myeloid lineages, but whether or not delta-1 affects the formation of pDCs is unknown and was tested here. Human CD34+ progenitor cells were cultured onto delta-1-expressing OP9 stroma in the presence of flt-3 ligand and IL-7, and this efficiently generated BDCA-2+ CD123+ CD4+ CD11c- cells with the characteristic morphology of pDCs, expressing toll-like receptor-9 (TLR9), pre-Talpha mRNAs, and secreting CpG-induced IFN-alpha. Delta-1 augmented the numbers of BDCA-2+ cells produced without affecting their proliferation, and the effect was blocked by gamma-secretase inhibition. The development of pDCs was stroma-, delta-1-, and cytokine-dependent and could be induced from committed lymphoid progenitor cells, which responded to delta-1 by opposite changes in pDC- and B-cell production. Our results identify delta-1 as a novel factor enhancing pDC hematopoiesis and delineate a new role for Notch signaling in lymphopoiesis by showing its opposite effect on pDC and B lineage determination.