We have previously described enrichment of antigen-presenting HLA-DR⁺ nuclear RelB⁺ dendritic cells (DCs) in rheumatoid arthritis (RA) synovium. CD123⁺HLA-DR⁺ plasmacytoid DCs (pDCs) and their precursors have been identified in human peripheral blood (PB), lymphoid tissue, and some inflamed tissues. We hypothesized recruitment of pDCs into the inflamed RA synovial environment and their contribution as antigen-presenting cells (APCs) and inflammatory cells in RA. CD11c⁺ myeloid DCs and CD123⁺ pDCs were compared in normal and RA PB, synovial fluid (SF), and synovial tissue by flow cytometry, immunohistochemistry, and electron microscopy and were sorted for functional studies. Nuclear RelB^-CD123⁺ DCs were located in perivascular regions of RA, in a similar frequency to nuclear RelB⁺CD123^- DCs, but not normal synovial tissue sublining. Apart from higher expression of HLA-DR, the numbers and phenotypes of SF pDCs were similar to those of normal PB pDCs. While the APC function of PB pDCs was less efficient than that of PB myeloid DCs, RA SF pDCs efficiently activated resting allogeneic PB T cells, and high levels of IFN-γ, IL-10, and tumor necrosis factor α were produced in response to incubation of allogeneic T cells with either type of SF DCs. Thus, pDCs are recruited to RA synovial tissue and comprise an APC population distinct from the previously described nuclear RelB⁺ synovial DCs. pDCs may contribute significantly to the local inflammatory environment.