Lymphocyte activation gene 3 (LAG-3) is a CD4-related, activation-induced cell surface molecule expressed by various lymphoid cell types and binds to MHC class II with high affinity. We have previously shown that LAG-3 negatively regulates the expansion of activated T cells and T cell homeostasis, and is required for maximal regulatory T cell function. In this study, we demonstrate for the first time that LAG-3 is also expressed on CD11c(low)/B220(+)/PDCA-1(+) plasmacytoid dendritic cells (pDCs). Lag3 expression, as determined by real time PCR, was approximately 10-fold greater in pDCs than in either regulatory T cells or activated T effector cells. Activated pDCs also generate approximately 5 times more sLAG-3 than activated T cells. LAG-3-deficient pDCs proliferate and expand more than wild-type pDCs in vivo in response to the TLR9 ligand, CpG. However, the effect of LAG-3 appears to be selective as there was no effect of LAG-3 on the expression of MHC class II, TLR9, and chemokine receptors, or on cytokine production. Lastly, adoptive transfer of either Lag3(+/+) or Lag3(-/-) T cells plus or minus Lag3(+/+) or Lag3(-/-) pDCs defined a role for LAG-3 in controlling pDC homeostasis as well as highlighting the consequences of deregulated Lag3(-/-) pDCs on T cell homeostasis. This raised the possibility of homeostatic reciprocity between T cells and pDCs. Collectively, our data suggests that LAG-3 plays an important but selective cell intrinsic and cell extrinsic role in pDC biology, and may serve as a key functional marker for their study.