Phosphoinositide-dependent kinase-1 (PDK1) controls the activation of a subset of AGC kinases. Using a conditional knockout of PDK1 in haematopoietic cells, we demonstrate that PDK1 is essential for B cell development. B-cell progenitors lacking PDK1 arrested at the transition of pro-B to pre-B cells, due to a cell autonomous defect. Loss of PDK1 decreased the expression of the IgH chain in pro-B cells due to impaired recombination of the IgH distal variable segments, a process coordinated by the transcription factor Pax5. The expression of Pax5 in pre-B cells was decreased in PDK1 knockouts, which correlated with reduced expression of the Pax5 target genes IRF4, IRF8 and Aiolos. As a result, Ccnd3 is upregulated in PDK1 knockout pre-B cells and they have an impaired ability to undergo cell-cycle arrest, a necessary event for Ig light chain rearrangement. Instead, these cells underwent apoptosis that correlated with diminished expression of the pro-survival gene Bcl2A1. Reintroduction of both Pax5 and Bcl2A1 together into PDK1 knockout pro-B cells restored their ability to differentiate in vitro into mature B cells.