Polysaccharide A (PSA), the archetypical immunomodulatory molecule of the gut commensal Bacteroides fragilis, induces regulatory T cells to secrete the anti-inflammatory cytokine interleukin-10 (IL-10). The cellular mediators of PSA's immunomodulatory properties are incompletely understood. In a mouse model of colitis, we find that PSA requires both innate and adaptive immune mechanisms to generate protection. Plasmacytoid DCs (PDCs) exposed to PSA do not produce proinflammatory cytokines, but instead they specifically stimulate IL-10 secretion by CD4+ T cells and efficiently mediate PSA-afforded immunoprotection. PSA induces and preferentially ligates Toll-like receptor 2 on PDCs but not on conventional DCs. Compared with other TLR2 ligands, PSA is better at enhancing PDC expression of costimulatory molecules required for protection against colitis. PDCs can thus orchestrate the beneficial immunoregulatory interaction of commensal microbial molecules, such as PSA, through both innate and adaptive immune mechanisms.