Antigen-specific T lymphocytes recognize peptide antigens in conjunction with the products of the self major histocompatibility complex (MHC). In addition, they are immunologically self-tolerant. To acquire these characteristics, thymocytes undergo a stringent cellular selection process during development. The study of thymocyte development at the molecular level is impeded in mammalian systems by the heterogeneity of the thymocyte population in each individual. However, the use of mice transgenic for the T-cell receptor successfully circumvented this problem and made it possible to elucidate some of the requirements for positive selection, which leads to thymocyte differentiation, survival, and MHC restriction, and negative selection, which leads to programmed cell death, clonal deletion, and self-tolerance. T-cell fate is determined primarily by the nature of the interaction between a complex composed of the T-cell receptor and CD4 or CD8 molecules on the T-cell surface and the peptide antigens that are bound to MHC products and are displayed by other nonlymphoid cells present in the thymus. The molecular analysis of the receptor-ligand interactions involved in this process in transgenic mice provides opportunities to dissect cell fate determination in an intact mammalian system and to understand the molecular basis for immunological self-tolerance and MHC-restriction.