Information was sought on the features of epithelial cells in the murine thymic medulla. The expression of major histocompatibility complex (MHC) molecules on medullary epithelium was defined by light microscopy with the aid of bone marrow chimeras and MHC-transgenic mice. A proportion of medullary epithelial cells was found to show conspicuously high expression of conventional MHC (H-2) class I (K, D, L) and class II (I-A, I-E) molecules. These cells express a high density of the Y-Ae epitope, a complex of an E alpha peptide and I-Ab molecules found on typical bone marrow-derived cells. MHC+ medullary epithelial cells show limited expression of I-O molecules, a class of atypical nonpolymorphic MHC-encoded class II molecules present on B cells. Other medullary epithelial cells express a high density of I-O molecules but show little or no expression of typical MHC class I or II molecules. MHC and I-O expression thus appear to subdivide medullary epithelial cells into two phenotypically distinct subsets. This applies in adults. In the embryonic thymus most medullary epithelial cells express both types of molecules.