B-1a cells are long-lived, self-renewing innate-like B cells that predominantly inhabit the peritoneal and pleural cavities. In contrast to conventional B-2 cells, B-1a cells have a receptor repertoire that is biased towards bacterial and self-antigens, promoting a rapid response to infection and clearing of apoptotic cells. Although B-1a cells are known to primarily originate from fetal tissues, the mechanisms by which they arise has been a topic of debate for many years. Here we show that in the fetal liver versus bone marrow environment, reduced IL-7R/STAT5 levels promote immunoglobulin kappa gene recombination at the early pro-B cell stage. As a result, differentiating B cells can directly generate a mature B cell receptor (BCR) and bypass the requirement for a pre-BCR and pairing with surrogate light chain. This ‘alternate pathway’ of development enables the production of B cells with self-reactive, skewed specificity receptors that are peculiar to the B-1a compartment. Together our findings connect seemingly opposing lineage and selection models of B-1a cell development and explain how these cells acquire their unique properties.