B-lymphocyte development involves sequential DNA rearrangements of immunoglobulin (Ig) heavy (mu) and light (kappa, lambda) chain loci and is dependent on transient expression of mu containing pre-antigen receptor complexes (pre-BCR). To date, genetic analysis has not identified transcription factors that coordinate the pre-B-to-B transition. We demonstrate that the related interferon regulatory factors IRF-4 (Pip) and IRF-8 (ICSBP) are required for Ig light but not heavy-chain gene rearrangement. In the absence of these transcription factors, B-cell development is arrested at the cycling pre-B-cell stage and the mutant cells fail to down-regulate the pre-BCR. On the basis of molecular analysis, we propose that IRF-4,8 function as a genetic switch to down-regulate surrogate light-chain gene expression and induce conventional light-chain gene transcription and rearrangement.