Chlamydia pneumoniae (Cpn) infection is a leading cause for a variety of respiratory diseases and has been implicated in the pathogenesis of chronic inflammatory diseases. The regulatory mechanisms in host defense against Cpn infection are less understood. In this study, we investigated the role of plasmacytoid dendritic cells (pDCs) in immune regulation in Cpn respiratory tract infection. We found that in vivo depletion of pDCs increased the severity of infection and lung pathology. Mice depleted of pDC had greater body weight loss, higher lung bacterial burden and excessive tissue inflammation compared to the control mice. Analysis of specific T cell cytokine production pattern in the lung following Cpn infection revealed that pDC depleted mice produced significantly higher amounts of inflammatory cytokines, especially TNF-α, but lower IL-10 compared to the controls. In particular, pDC depleted mice showed pathogenic T cell responses characterized by inflammatory type-1 (CD8 and CD4) and inflammatory Th2 cell responses. Moreover, pDC depletion dramatically reduced CD4 regulatory T cells (Tregs) in the lungs and draining lymph nodes. Furthermore, pDC-T cell co-culture experiments showed that pDCs isolated from Cpn infected mice were potent in inducing IL-10 producing CD4 Tregs. Together, these findings provide in vivo evidence for a critical role of pDCs in homeostatic regulation of immunity during Cpn infection. Our findings highlight the importance of a ‘balanced’ immune response for host protective immunity and preventing detrimental immunopathology during microbial infections.