Dendritic cells (DCs) are a heterogeneous population within the mononuclear phagocyte system (MPS) that derive from bone marrow precursors. Commitment and specification of hematopoietic progenitors to the DC lineage is critical for the proper induction of both immunity and tolerance. This review summarizes the important cytokines and transcription factors required for differentiation of the DC lineage as well as further diversification into specific DC subsets. We highlight recent advances in the characterization of immediate DC precursors arising from the common myeloid progenitor (CMP). Particular emphasis is placed on the corresponding temporal expression of relevant factors involved in regulating developmental options.