Malaria remains a global health burden causing significant morbidity, yet the mechanisms underlying disease outcomes and protection are poorly understood. Herein, we analyzed the peripheral blood of a unique cohort of Malawian children with severe malaria, and performed a comprehensive overview of blood leukocytes and inflammatory mediators present in these patients. We reveal robust immune cell activation, notably of CD14⁺ inflammatory monocytes, NK cells and plasmacytoid dendritic cells (pDCs) that is associated with very high inflammation. Using the Plasmodium yoelii 17X YM surrogate mouse model of lethal malaria, we report a comparable pattern of immune cell activation and inflammation and found that type I IFN represents a key checkpoint for disease outcomes. Compared to wild type mice, mice lacking the type I interferon (IFN) receptor exhibited a significant decrease in immune cell activation and inflammatory response, ultimately surviving the infection. We demonstrate that pDCs were the major producers of systemic type I IFN in the bone marrow and the blood of infected mice, via TLR7/MyD88-mediated recognition of Plasmodium parasites. This robust type I IFN production required priming of pDCs by CD169⁺ macrophages undergoing activation upon STING-mediated sensing of parasites in the bone marrow. pDCs and macrophages displayed prolonged interactions in this compartment in infected mice as visualized by intravital microscopy. Altogether our findings describe a novel mechanism of pDC activation in vivo and precise stepwise cell/cell interactions taking place during severe malaria that contribute to immune cell activation and inflammation, and subsequent disease outcomes.