Heterogeneous epithelial populations comprising the thymic environment influence early and late stages of T-cell development. The processes that regulate the differentiation of thymic epithelium and that are responsible for this heterogeneity are not well understood, although mesenchymal/epithelial interactions are clearly involved. Here, we show that targeted expression by thymocytes of an fibroblast growth factor receptor-2IIIb (FGFR2IIIb) ligand, FGF10, profoundly alters the differentiation and function of thymic epithelium (TE). Reconstitution of irradiated lckFGF10 mice with normal bone marrow restores normal thymic organization and function, while wild-type mice reconstituted with lckFGF10 bone marrow recapitulates some of the thymic alterations seen in lckFGF10 mice. We also demonstrate that interference with FGFR2IIIb signaling in the thymus with a soluble FGFR2IIIb dominant-negative fusion protein leads to precocious reductions in thymic size and cellularity that resemble age-related thymic involution. These findings indicate that TE compartments are dynamically maintained and that FGF signals are involved in this process. Developmental Dynamics 236:3459–3471, 2007. © 2007 Wiley-Liss, Inc.