High-dimensional approaches have revealed heterogeneity amongst dendritic cells (DCs), including a population of transitional DCs (tDCs) in mice and humans. However, the origin and relationship of tDCs to other DC subsets has been unclear. Here we show that tDCs are distinct from other well-characterized DCs and conventional DC precursors (pre-cDCs). We demonstrate that tDCs originate from bone marrow progenitors shared with plasmacytoid DCs (pDCs). In the periphery, tDCs contribute to the pool of ESAM type 2 DCs (DC2s), and these DC2s have pDC-related developmental features. Different from pre-cDCs, tDCs have less turnover, capture antigen, respond to stimuli and activate antigen-specific naïve T cells, all characteristics of differentiated DCs. Different from pDCs, viral sensing by tDCs results in IL-1β secretion and fatal immune pathology in a murine coronavirus model. Our findings suggest that tDCs are a distinct pDC-related subset with a DC2 differentiation potential and unique proinflammatory function during viral infections.