Single-cell next-generation sequencing has revolutionized our understanding of cellular heterogeneity and functional genomics. Single-cell RNA sequencing (scRNA-seq), which quantifies gene expression levels, and single-cell assay for transposase-accessible chromatin using sequencing (scATAC-seq), which profiles genome-wide chromatin accessibility, are the most popular assays of transcriptional and epigenetic variability within individual cells, respectively. Here, I present recent technological advancements, as well as best practices and state-of-the-art methods of data analysis for scRNA-seq and scATAC-seq; particularly, methods for reconstructing cell differentiation trajectories mapping the continuous epigenetic landscape during development. The work in my Ph.D. thesis showcases the applications of single-cell analysis in studying cellular heterogeneity and developmental processes. First, I present CellSpace, a sequence-informed algorithm for scATAC-seq data analysis that learns a shared latent space embedding for cells and DNA k-mers, and I evaluate CellSpace in recovering meaningful biological structure and developmental trajectories, computing accurate transcription factor motif scores, scaling to large datasets, mitigating batch effects while conserving biological heterogeneity, and learning a shared embedding for datasets with different peak atlases. Next, I present a study identifying a novel antigen-presenting cell type in peripheral lymph nodes, called Thetis cells (TCs), in part by scRNA-seq and scATAC-seq data analysis. TCs exhibit transcriptional features of both medullary thymic epithelial cells and dendritic cells and comprise four sub-groups (I¬–IV) with distinct transcriptional and epigenetic profiles. In this study, we investigated the role of TCs in establishing peripheral immune tolerance through extensive experimental and computational analyses and discovered that TC IV plays a critical role in suppressing inflammatory responses against gut microbiota by promoting peripheral regulatory T cell differentiation upon encounter with commensal-derived antigens within intestinal lymph nodes during a narrow window in early life. Finally, I present a comprehensive study demonstrating the role of HHEX, a known regulator of liver development, as a gatekeeper required for pancreatic lineage commitment and restricting cellular plasticity towards liver and duodenum fates. This study utilizes CRISPR–Cas9-mediated gene editing, human pluripotent-stem-cell-guided differentiation, genomics and proteomics analyses, and scRNA-seq analysis. I conclude this thesis by summarizing the background and findings of each study, describing the ongoing research, and suggesting potential future work.