At the 14th day of gestation, embryonic thymocytes+ are large, functionally incompetent cells with H-2K+ Thy-1+ B14- Ly-2- L3T4- phenotype, some of which express TL antigen. Differentiation of these cells in organ culture is characterized by: 1) appearance of cells expressing Ly-2 and L3T4 molecules, first among the population of large cells, after 2 days of culture; 2) appearance of small H-2K- Thy-1+TL+B14+Ly-2+L3T4+ and H-2K-Thy-1+TL+B14-Ly-2+ L3T4+ cells between days 2 and 4; 3) accumulation of small H-2K- Thy-1+ TL+ B14- Ly-2+ L3T4+ (but not H-2K- Thy-1+ TL+ B14+ Ly-2+ L3T4+) cells until day 5 of culture, and their subsequent gradual disappearance which is paralleled by an increase of the proportion of medium-sized H-2K+ Thy-1+ TL- B14- cells with various Ly-2 L3T4 phenotypes; 4) appearance and subsequent accumulation of cytolytic and IL 2-producing cells between days 4 and 6. Comparison of these results with the data from similar in vivo studies shows that differentiation of organ-cultured thymocytes rather closely follows the in vivo development only during the first week of culture and shows significant deviations thereafter. Precursors of cytolytic cells and cytolytic effector cells as well as IL 2-producing cells are found among both Ly-2+ and Ly-2- populations of thymocytes, indicating that there is no clear association between Ly-2 phenotype and the ability to kill or to secrete IL 2.