Recent studies indicate that CTLA-4 interaction with B7 ligands transduces an inhibitory signal to T lymphocytes. Mice homozygous for a null mutation in CTLA-4 have provided the most dramatic example of the functional importance of CTLA-4 in vivo. These animals develop a fatal lymphoproliferative disorder and were reported to have an increase in CD4(+) and CD8(+) thymocytes and CD4(-)CD8(-) thymocytes, and a decrease in CD4(+)CD8(+) thymocytes. Based on these observations, it was proposed that CTLA-4 is necessary for normal thymocyte development. In this study, CTLA-4-deficient mice carrying an insertional mutation into exon 3 of the ctla-4 gene were generated. Although these mice display a lymphoproliferative disorder similar to previous reports, there was no alteration in the thymocyte profiles when the parathymic lymph nodes were excluded from the thymi. Further, thymocyte development was normal throughout ontogeny and in neonates, and there was no increase in thymocyte production. Finally, T cell antigen receptor signaling, as assessed by proximal and distal events, was not altered in thymocytes from CTLA-4(-/-) animals. Collectively, these results clearly demonstrate that the abnormal T cell expansion in the CTLA-4-deficient mice is not due to altered thymocyte development and suggest that the apparent altered thymic phenotype previously described was due to the inclusion of parathymic lymph nodes and, in visibly ill animals, to the infiltration of the thymus by activated peripheral T cells. Thus it appears that CTLA-4 is primarily involved in the regulation of peripheral T cell activation.