The presence of T and NK cells in the human fetal liver and the fact that fetal liver hemopoietic progenitor cells develop into T and NK cells suggest a role for the fetal liver compartment in T and NK cell development. In this work, we show that the capacity of fetal liver progenitors to develop into T cells, in a human/mouse fetal thymic organ culture system, is restricted to an immature subset of CD34+ CD38- cells. No T cell-committed precursors are contained within the more differentiated CD34+ CD38+ population. This conclusion is supported by the observations that no TCR-delta gene rearrangements and no pre-TCR-alpha expression can be detected in this population. However, NK cells were derived from CD34+ CD38- and CD34+ CD38+ fetal liver cells cultured in the presence of IL-15, IL-7, and Flt-3 ligand. Eighty to ninety percent of cells arising from the CD34+ CD38+ population expressed the NK cell-associated markers CD56, CD16, CD94, and NKR-P1A. Several subpopulations of NK cell precursors were identified by differential expression of these receptors. Based on the detection of populations with a similar antigenic profile in freshly isolated fetal liver cells, we propose a model of NK cell differentiation. Collectively, our findings suggest that CD34+ cells differentiate into NK cells, but not into mature T cells, in the human fetal liver.