Because of its role in positive selection, the ability of cortical epithelium to induce tolerance is controversial. On the one hand, experiments with transplanted thymuses showed that the recipients were functionally tolerant of all the antigens expressed by the cells of those thymuses, including cells of the cortical epithelium. On the other, the keratin 14 (K14) transgenic mouse strain, which expresses MHC class II on cortical epithelium under the control of the K14 promoter, does not seem to be tolerant of the transgenic MHC molecule. Here we tested whether the lack of tolerance in the K14 mouse might be more apparent than real. We found that K14 mice are indeed completely tolerant of K14 cortical thymic epithelium, whereas they remain reactive to tissues that express the same MHC allele under normal genetic control. These results establish the ability of cortical epithelium to induce central tolerance, and impinge on several of the models concerning positive selection of newly developing T cells.