Natural killer cells gauge the absence of self class I MHC on susceptible target cells by means of inhibitory receptors such as members of the Ly49 family. To initiate killing by natural killer cells, a lack of inhibitory signals must be accompanied by the presence of activating ligands on the target cell. Although natural killer cell-mediated rejection of class I MHC-deficient bone marrow (BM) grafts is a matter of record, little is known about the targeting in vivo of specific cellular subsets by natural killer cells. We show here that development of class I MHC-negative thymocytes is delayed as a result of natural killer cell toxicity after grafting of a class I MHC-positive host with class I MHC-negative BM. Double positive thymocytes that persist in the presence of natural killer cells display an unusual T cell receptor-deficient phenotype, yet nevertheless give rise to single positive thymocytes and yield mature class I MHC-deficient lymphocytes that accumulate in the class I MHC-positive host. The resulting class I MHC-deficient CD8 T cells are functional and upon activation remain susceptible to natural killer cell toxicity in vivo. Reconstitution of class I MHC-deficient BM precursors with H2-K(b) by retroviral transduction fully restores normal thymic development.