The subnuclear location and chromatin state of the immunoglobulin heavy-chain (IgH) locus have been implicated in the control of VDJ recombination. VH-to-DJH rearrangement of distal, but not proximal V(H) genes, furthermore, depends on the B-lineage commitment factor Pax5 (BSAP). He e we demonstrate that ectopic Pax5 expression from the Ikaros promote induces proximal rather than distal VH-DJH rearrangements in Ik(Pax5/+) thymocytes, thus recapitulating the loss-of-function phenotype of Pax5-/- pro-B cells. The phenotypic similarities of both cell types include (1) chromatin accessibility of distal VH genes in the absence of VH-DJH rearrangements, (2) expression of the B-cell-specific regulator EBF, (3) central location of IgH alleles within the nucleus, and (4) physical separation of distal VH genes from proximal segments in an extended IgH locus. Reconstitution of Pax5 expression in Pax5-/- pro-B cells induced large-scale contraction and distal VH-DJH rearrangements of the IgH locus. Hence, VH-DJH recombination is regulated in two steps during early B-lymphopoiesis. The IgH locus is first repositioned from its default location at the nuclear periphery toward the center of the nucleus, which facilitates proximal VH-DJH recombination. Pax5 subsequently activates locus contraction and distal VH-DJH rearrangements in collaboration with an unknown factor that is present in pro-B cells, but absent in thymocytes.