Binding of the surrogate light chain (SLC) to the heavy chain (HC) of the pre-B cell receptor (preBCR) is an important quality control checkpoint during B cell development as roughly 50% of the rearranged HCs are defective. Unlike the regular light chain (LC), the SLC is a hetero-dimer of VpreB and λ5, both containing unstructured extensions, the unique regions. The molecular mechanisms that underlie the complex assembly processes which give rise to the final pre-BCR is not fully understood. Here we show, via reconstitution of the pre-BCR in vitro and in cells that λ5 plays a key role in the pre-BCR assembly. During SLC assembly, a β-strand, located between the λ5 domain and the unique region, induces structure in the largely unfolded VpreB, creating a high affinity complex. In addition, association of λ5 with the unstructured HC CH1 domain is required for its folding. This is essential for pre-BCR assembly and its release from the endoplasmic reticulum (ER). Finally, the unique region of λ5 plays a pivotal role in the antigen interaction of the SLC-HC complex. Together, our results reveal a multi-step mechanism for SLC and pre-BCR assembly, governed by association-induced folding reactions required for structural integrity and function.