The differentiation of lymphoid cells in the early foetal mouse thymus was studied in vivo and in organ culture. The lymphoid precursors found in the 13 and 14 day foetal thymus constituted about 50% of the total thymus cell population. These T precursors were large blast-like cells which already expressed the Thy-1 antigen but were mostly TL negative. Both in vivo and in vitro the blasts were rapidly replaced by a population of typical small lymphocytes which were strongly Thy-1 and TL positive but Ig negative. In organ cultures grown under optimal conditions, large bimodal increases in cell numbers occurred. An initial population of about 2 x 10(4) T precursors per thymus lobe gave rise to nearly 10(6) predominantly Thy-1 and TL positive small lymphocytes by the 6--8th day in vitro. After this time lymphocyte numbers decreased until about the 10th day when they again increased to form a second peak of small lymphocytes on the 12--13th day. These cells were also predominantly Thy-1 positive but the majority were now TL negative. No Ig positive B lymphocytes were detected either by immunofluorescence or by autoradiography using polyvalent anti-MIg sera and no plasma cells were detected by electronmicroscopy. At all times however, minor subpopulations of Thy-1 negative small cells were present. The production of small lymphocytes during the 1st week of culture was critically dependent on culture conditions and particularly on the batch of FCS used. The population developing during the 2nd week required less stringent conditions and was less dependent on FCS. The culture systems described should prove useful in the study of T-lymphocyte differentiation.