Our prior study in multiple myeloma (MM) patients showed increased numbers of plasmacytoid dendritic cells (pDCs) in the bone marrow (BM), which both contribute to immune dysfunction as well as promote tumor cell growth, survival and drug resistance. Here we show that a novel Toll-like receptor (TLR-9) agonist C792 restores the ability of MM patient-pDCs to stimulate T-cell proliferation. Coculture of pDCs with MM cells induces MM cell growth; and importantly, C792 inhibits pDC-induced MM cell growth and triggers apoptosis. In contrast, treatment of either MM cells or pDCs alone with C792 does not affect the viability of either cell type. In agreement with our in vitro data, C792 inhibits pDC-induced MM cell growth in vivo in a murine xenograft model of human MM. Mechanistic studies show that C792 triggers maturation of pDCs, enhances interferon-α and interferon-λ secretion and activates TLR-9/MyD88 signaling axis. Finally, C792 enhances the anti-MM activity of bortezomib, lenalidomide, SAHA or melphalan. Collectively, our preclinical studies provide the basis for clinical trials of C792, either alone or in combination, to both improve immune function and overcome drug resistance in MM.