The epithelial compartment of the thymus arises from endoderm of the 3rd pharyngeal pouch. As it moves from a cervical to a mediastinal position during development, this epithelium becomes populated by lymphoid progenitor cells from the blood and begins to support their differentiation along the T cell lineage. Productive differentiation of thymic epithelium is strictly dependent on the foxn1 transcription factor, as evidenced by the lack of functional thymic tissue in nude mice that carry a spontaneous loss-of-function mutation of foxn1. Evaluation of the thymic rudiment epithelium from nude mice revealed phenotypic properties and tissue organization that was strongly reminiscent of respiratory epithelium. These data suggest that foxn1 may be involved in directing lineage choices of multi-potential progenitor epithelial cells rather than simply affecting the terminal differentiation program of epithelial cells specified to a thymic fate. Developmental Dynamics 233:1605–1612, 2005. © 2005 Wiley-Liss, Inc.