CD45 is a protein tyrosine phosphatase that is expressed on all nucleated hematopoietic cells, from stem cells to memory cells. Although its function in regulating the threshold of Ag receptor signaling is well established, its role in other leukocytes, particularly progenitor cells, is not well defined. In this study, we find CD45 affects early thymocyte development. Examination of the CD4(-)CD8(-) double negative (DN) populations revealed a significant reduction in the DN1 population, in both the numbers of CD117(+) DN1 cells (the early thymocyte progenitors) and the CD117(-) DN1 cells in the thymus of CD45(-/-) mice. There was also a reduced frequency of CCR9(+) Lin(-)Sca-1(+)c-Kit(+) cells and common lymphoid progenitors in the CD45(-/-) bone marrow. Competitive bone marrow reconstitution showed a reduced contribution of DN1 cells from CD45(-/-) cells, consistent with an intrinsic defect in these cells. CD45(-/-) DN1 cells exhibited reduced proliferation in vivo and reduced CXCL12-mediated migration in vitro. The loss of CD45 led to the accumulation of an intermediate DN1.5 thymocyte population in vivo that was dependent on Notch for progression. In vivo, CD117(-) DN1 cells gave rise to gammadelta T cells. In vitro, CD117(-) DN1 cells progressed to DN4 on OP9-DL1 cells but CD117(-) DN1 cells lacking CD45 did not. CD45(-/-) CD117(-) DN1 cells were also deficient in TCRbeta expression. Thus, CD45 deficiency affects the development and progression of DN1 thymocytes.