The present study has characterized T lymphoid progenitor cells that reside in mouse fetal liver. Day 14 fetal liver contains progenitor cells that can differentiate into mature T cells upon being transferred into the thymus by hanging drop cultures. Fractionation of fetal liver cells indicated that T progenitor cells were confined in TER119- CD45+ FcR(low) cells. To our surprise, B220+ rather than B220- fraction in TER119- CD45+ FcR(low) fetal liver cells exhibited efficient progenitor activity generating T cells. Progenitor activity by the B220+ fetal liver cells was restricted to T cells, B cells, and macrophages at frequency approximately 1/10, approximately 1/10, and approximately 1/20, respectively, of isolated B220+ cells. B220+ fetal liver cells did not contain detectable D-J rearrangement of TCR-beta gene and were c-kit+ IL-7R+ Thy-1- CD3- CD4(low) CD8- CD25- CD44+. B220+ fetal liver cells expressed mRNAs encoding TCR-beta, pT alpha, Ig alpha, and VpreB. Interestingly, TCR beta-chains were expressed by B220+ fetal liver cells in the VDJ-rearranged TCR-beta-transgenic mice, indicating that TCR-beta transcription and B220 expression are activated simultaneously by the transgenic B220+ fetal liver cells. These results indicate that B220 is expressed by fetal liver lymphoid progenitor cells that can become T cells, and suggest that lymphoid progenitor cells in fetal liver concurrently undergo T- and B-specific molecular events within a single cell.