Within the lymphoid compartment of mice, the Hlx homeobox gene is expressed only at early stages of B-lymphoid differentiation. To determine whether Hlx influences lymphopoiesis, transgenic mice were developed to enforce Hlx expression throughout the B and T cell lineages. The strain with the highest transgene expression in both cell types (Hlx-94) exhibited marked perturbations in both B and T cell development. In these mice, the thymus lacked almost all mature CD4+8- and CD8+4- cells and the medulla was greatly shrunken, whereas nearly one-half the T cells in the periphery were CD4+8+, a cell type normally confined to the thymus. The peripheral CD4+8+ cells had some features of mature T cells, including responsiveness to mitogens. Presumably these cells had emigrated prematurely from the thymus and generated mature T cells in the periphery. Bone marrow transplantation experiments indicated that the defects was intrinsic to the Hlx-94 hematopoietic cells rather than support cells. Although thymocyte development in Hlx-94 mice was blocked at the stage when selection normally occurs, analysis of lymphocyte populations in the progeny of crosses with mice transgenic for an anti-HY T cell receptor indicated that neither positive nor negative selection of T cells was markedly affected. In addition to T cell defects, Hlx-94 mice had subnormal numbers of B lymphoid cells in the bone marrow and spleen, and their surface phenotype suggested that B cell development after the pro-B stage was impeded. Furthermore, the B cell response to stimulation with LPS was impaired. These striking developmental defects suggest that the Hlx gene may help to govern lymphoid maturation.