The normal development of T cells in the thymus requires both positive and negative selection. During positive selection, thymocytes mature only if their T-cell receptors react with some specificity to host major histocompatibility complex (MHC) and host peptides. During negative selection, thymocytes die if their T-cell receptors react with too high an affinity to the presenting cell, self MHC, and peptides to which they are exposed. These two processes are important for the development of the T-cell repertoire and the acquisition of self-tolerance, but their precise location and temporal relationship are not known. We have used the keratin 14 (K14) promoter to re-express a class II MHC antigen (I-Ab) in class II-negative mice. The transgenic I-A molecule is expressed only on thymic cortical epithelium; thymic medullary epithelium and bone-marrow-derived cells are I-A negative. CD4+ cells are positively selected in K14 mice, but clonal deletion does not ocur in K14 mice or in relB-negative mice, which lack a thymic medulla. The K14 CD4 cells are autoreactive, as they proliferate extensively to and specifically lyse I-Ab-positive target cells. These autoreactive cells make up 5% of the peripheral CD4 T cells, providing and estimate of the minimal frequency of positively selected cells that must subsequently undergo negative selection for self-tolerance to be preserved. Thus positive and negative selection occur in anatomically distinct sites.