Pre-B cell receptor (pre-BCR) signaling and migration from IL-7-rich environments cooperate to drive pre-B cell differentiation via transcriptional programs that remain unclear. We show that the Ikaros transcription factor is required for the differentiation of large pre-B to small pre-B cells. Mice deleted for Ikaros in pro/pre-B cells show a complete block of differentiation at the fraction C' stage, and Ikaros-null pre-B cells cannot differentiate upon withdrawal of IL-7 in vitro. Restoration of Ikaros function rescues pre-B cell differentiation in vitro and in vivo and depends on DNA binding. Ikaros is required for the down-regulation of the pre-BCR, Igκ germline transcription, and Ig L chain recombination. Furthermore, Ikaros antagonizes the IL-7-dependent regulation of >3,000 genes, many of which are up- or down-regulated between fractions C' and D. Affected genes include those important for survival, metabolism, B cell signaling, and function, as well as transcriptional regulators like Ebf1, Pax5, and the Foxo1 family. Our data thus identify Ikaros as a central regulator of IL-7 signaling and pre-B cell development.