AbstractType I and III interferons (IFN-I/λ) are key antiviral mediators against SARS-CoV-2 infection. Here, we demonstrate that the plasmacytoid dendritic cells (pDCs) are predominant IFN-I/λ source by sensing SARS-CoV-2-infected cells. We show that sensing of viral RNA by pDCs requires sustained cell adhesion with infected cells. In turn, the pDCs restrict viral spread by a local IFN-I/λ response directed toward SARS-CoV-2-infected cells. This specialized function enables pDCs to efficiently turn-off viral replication, likely by a concentrated flux of antiviral effectors at the contact site with infected cells. Therefore, we propose that pDC activation is essential to locally control SARS-CoV-2-infection. By exploring the pDC response in patients, we further demonstrate that pDC responsiveness correlates with the severity of the disease and in particular that it is impaired in severe COVID-19 patients. Thus, the ability of pDCs to respond to SARS-CoV-2-infected cells could be a key to understand severe cases of COVID-19.HighlightspDCs are immune cells against SARS-CoV-2-infected cellspDC-mediated IFN-I/λ response against SARS-CoV-2 infected cells control COVID- 19 progressionpDC response by SARS-CoV-2 is restricted to IRF7-prioritized signaling leading to antiviral controlpDC antiviral response directed toward contacting SARS-CoV-2-infected cells