The use of hematopoietic stem cells for in utero transplantation to create permanent hematochimerism represents a new concept in fetal therapy, although this approach has provided heterogeneous results. In this paper we have undertaken molecular, phenotypic and functional studies aimed at identifying the presence of fully competent T lymphocytes in samples of fetal livers and cord blood. We found mature VDJ TCR beta chain transcripts in fetal liver cells taken from 7 to 16 weeks of gestation and a similar pattern was detected in cord blood cells sampled from 13.5 to 20.5 weeks of gestation. A Vbeta8 gene sequence comparable to that detected in adult PBMC was found in fetal liver samples at 9 or 17 weeks gestation. PreTalpha message was detected in all samples and its expression decreased in fetal blood samples with increasing gestational age while Calpha message appeared at 9.4 weeks and its expression increased during gestational age. T cell clones obtained from fetal liver cells showed a mature TCR alphabeta+, CD8+ phenotype and displayed strong alloreactivity against allo-MHC class I molecules. The presence of alloreactive T lymphocytes may explain the failure to engraft in fetuses older than 13 to 16 weeks and may provide insights into fetal liver transplantation. Bone Marrow Transplantation (2000) 25, 135-141.