We have produced transgenic mice that express rearranged T cell Ag receptor gamma and delta transgenes in the alpha beta lineage of thymocytes. Thymi in these mice contain normal numbers of CD4+CD8+ cells that express low levels of the TCR-gamma delta. Analysis of the delta locus in these thymi indicates that these cells are in the alpha beta lineage even though they express the TCR-gamma delta. This shows that expression of the TCR-gamma delta in early thymocytes can lead to all of the consequences that are normally mediated by the beta-chain. These consequences include maturation to the CD4+CD8+ stage, entry into the cell cycle, and cessation of beta rearrangement. Therefore, the data support a model in which formation of a functional CD3 complex on immature CD4-CD8- thymocytes leads to further development in the absence of extracellular ligand recognition. The data also show that the gamma delta vs alpha beta lineage decision is made in a manner that is independent of gamma and beta gene expression.