In this report, we describe the generation of two cloned epithelial cell lines, TE-71 and TE-75, from murine thymus. These cell lines resemble medullary thymic epithelium by a number of criteria, including reactivity with the monoclonal antibodies A2B5 and ER-TR5, the fucose-specific lectin derived from Ulex europeus, and the expression of keratins normally expressed by medullary thymic epithelial cells in situ. Constitutive Class II antigen expression by these cells is not detectable at the light or electron microscopic level or with flow cytometry. Following exposure to recombinant interferon-gamma or supernatants from mitogen-stimulated spleen cells, expression of Class II antigens by these thymic epithelial cell lines is increased, although less than the levels expressed by spleen cells. Medium conditioned by TE-71 and TE-75 cells exhibited colony-stimulating activity for bone marrow cells. In addition, TE-71-conditioned medium exhibited IL-1-like activity which could be neutralized with anti-IL-1 antibodies.