Phosphoinositide-3 kinase (PI3K) signaling is important for the survival of numerous cell types and class IA of PI3K is specifically required for the development of B cells but not for T cell development. Here, we show that class IA PI3K-mediated signals induce the expression of the transcription factor Pax5, which plays a central role in B cell commitment and differentiation by activating the expression of central B cell-specific signaling proteins such as SLP-65 and CD19. Defective class IA PI3K function leads to reduction in Pax5 expression and prevents B cell development beyond the stage expressing the precursor B cell receptor (pre-BCR). Investigating the mechanism of PI3K-induced Pax5 expression revealed that it involves a network of transcription factors including FoxO1 and Irf4 that directly binds to the Pax5 gene. Together, our results suggest that PI3K signaling links survival and differentiation of developing B cells with B cell identity and that decreased PI3K activity in pre-B cells results in reduced Pax5 expression and lineage plasticity.