NZB mice manifest a defect in tolerance induction by deaggregated heterologous gamma globulins. We have used an adoptive transfer system to study the defect. Thymectomized, intact, or thymectomized recipients given thymic epithelial grafts were studied after lethal irradiation and reconstitution with NZB, DBA/2, or (NZB x DBA(F1 marrow depleted of mature T cells. NZB thymocytes were responsible for the tolerance defect of NZB mice. The information for the defect was present in the NZB marrow prethymocyte. That defect could only be expressed when there was further maturation in association with a thymus. However, the normal DBA/2 thymic epithelium served as well as the abnormal NZB thymic epithelium. These studies resolve existing conflicts as to whether the NZB marrow or thymus is responsible for the loss of tolerance in association with autoimmunity.