Type 1 interferon-producing cells (IPCs), also known as plasmacytoid dendritic cell (DC) precursors, represent the key effectors in antiviral innate immunity and triggers for adaptive immune responses. IPCs play important roles in the pathogenesis of systemic lupus erythematosus (SLE) and in modulating immune responses after hematopoietic stem cell transplantation. Understanding IPC development from hematopoietic progenitor cells (HPCs) may provide critical information in controlling viral infection, autoimmune SLE, and graft-versus-host disease. FLT3-ligand (FLT3-L) represents a key IPC differentiation factor from HPCs. Although hematopoietic cytokines such as interleukin-3 (IL-3), IL-7, stem cell factor (SCF), macrophage-colony-stimulating factor (M-CSF), and granulocyte M-CSF (GM-CSF) promote the expansion of CD34+ HPCs in FLT3-L culture, they strongly inhibit HPC differentiation into IPCs. Here we show that thrombopoietin (TPO) cooperates with FLT3-L, inducing CD34+ HPCs to undergo a 400-fold expansion in cell numbers and to generate more than 6 x 10(6) IPCs per 10(6) CD34+ HPCs within 30 days in culture. IPCs derived from HPCs in FLT3-L/TPO cultures display blood IPC phenotype and have the capacity to produce large amounts of interferon-alpha (IFN-alpha) and to differentiate into mature DCs. This culture system, combined with the use of adult peripheral blood CD34+ HPCs purified from G-CSF-mobilized donors, permits the generation of more than 10(9) IPCs from a single blood donor.