The injection of parental strain cells into adrenalectomized (CBA x A) F1 mice induced a graft-versus-host (GVH) reaction which was morphologically characterized by thymus epithelial cell injury but not stress-related thymic involution. Thymocytes from mice undergoing a GVH reaction were studied for their ability to reconstitute allograft reactivity in thymectomized, irradiated, bone marrow reconstituted (ATxBM)(CBA XA) F1 mice. Thymocytes of mice experiencing a GVH reaction were [theta]-positive during the course of the reaction, however, by 40 days after GVH induction these thymocytes were unable to reconstitute allograft reactivity to H-2-incompatible skin grafts. It is proposed that GVH-induced thymic epithelial cell injury prevents or arrests normal T cell differentiation, resulting in a population of thymocytes which lack complete functional capability.