Bipotent progenitors for T and natural killer (NK) lymphocytes are thought to exist among early precursor thymocytes. The identification and functional properties of such a progenitor population remain undefined. We report the identification of a novel developmental stage during fetal thymic ontogeny that delineates a population of T/NK-committed progenitors (NK1. 1(+)/CD117(+)/CD44(+)/CD25(-)). Thymocytes at this stage in development are phenotypically and functionally distinguishable from the pool of multipotent lymphoid-restricted (B, T, and NK) precursor thymocytes. Exposure of multipotent precursor thymocytes or fetal liver- derived hematopoietic progenitors to thymic stroma induces differentiation to the bipotent developmental stage. Continued exposure to a thymic microenvironment results in predominant commitment to the T cell lineage, whereas coculture with a bone marrow-derived stromal cell line results in the generation of mature NK cells. Thus, the restriction point to T and NK lymphocyte destinies from a multipotent progenitor stage is marked by a thymus-induced differentiation step.