The functional role of the class Ib thymus-leukemia (TL) Ag expressed within the thymic cortex and intestinal mucosa of the mouse remains unknown. In an approach to elucidate the potential functionality of TL, we developed transgenic mice that ectopically express the H-2T18d gene product on essentially all nucleated cells through the control of a heterologous H-2Kb gene promoter. Transgenic mice demonstrated an increase in the number of CD4+ lymphocytes within the thymus and lymph nodes; these cells displayed an altered T cell receptor repertoire possibly suggesting a role for the ectopically expressed TL protein. The TL protein additionally displayed the characteristics of a bona fide transplantation Ag, because skin grafts from transgenic animals onto MHC- and minor histocompatibility Ag-matched nontransgenic recipient mice resulted in a rapid and vigorous immunologic rejection of the allograft. In MLR studies, transgenic stimulator cells induced the proliferation of responders to a level intermediate between genetically identical and H-2-disparate responder-stimulator combinations. The TL protein was also capable of stimulating cytotoxic T lymphocytes, thereby resulting in specific lysis of TL+ target cells. Further data demonstrated that the TL protein assembles with peptides that are modified at the amino terminus, and that TL retains these molecules at the cell surface. Together, these data suggest that H-2T18d is capable of interacting with T cells via a bound peptide. These data further support the possibility that TL may subserve a specialized function within the immunologic system.