Diabetes-prone BB (BB-DP) rats express several T cell dysfunctions which include poor proliferative and cytotoxic responses to alloantigen. The goal of this study was to determine the origin of these T cell dysfunctions. When BB-DP rats were thymectomized, T cell depleted, and transplanted with neonatal thymus tissue from diabetes-resistant and otherwise normal DA/BB F1 rats, the early restoration of T cell function proceeded normally on a cell-for-cell basis; i.e., peripheral T cells functioned like those from the thymus donor. Because the thymus in these experiments was subjected to gamma irradiation before transplantation and there was no evidence of F1 chimerism in the transplanted BB-DP rats, it appeared that the BB-DP T cell precursors could mature into normally functioning T cells if the maturation process occurred in a normal thymus. If the F1 thymus tissue was treated with dGua before transplantation, the T cells of these animals functioned poorly like those from untreated BB-DP rats. dGua poisons bone marrow-derived cells, including gamma radiation-resistant cells of the macrophage/dendritic cell lineages, while sparing the thymic epithelium. Therefore, the reversal of the T cell dysfunction depends on the presence in the F1 thymus of gamma radiation-resistant, dGua-sensitive F1 cells. Conversely, thymectomized and T cell-depleted F1 rats expressed T cell dysfunction when transplanted with gamma-irradiated BB thymus grafts. T cell responses were normal in animals transplanted with dGua-treated BB thymus grafts. With increasing time after thymus transplantation, T cells from all animals gradually expressed the functional phenotype of the bone marrow donor. Taken together these results suggest that BB-DP bone marrow-derived cells that are not T cell precursors influence the maturation environment in the thymus of otherwise normal BB-DP T cell precursors.