Thymocytes fail to tolerize the developing T cell repertoire to self MHC class I (MHC I) Ags because transgenic (CD2Kb) mice expressing H-2Kb solely in lymphoid cell lineages reject skin grafts mismatched only for H-2Kb. In this study, we examined why thymocytes fail to tolerize the T cell repertoire to self MHC I Ags. The ability of CD2Kb mice to reject H-2Kb skin grafts was age dependent because CD2Kb mice older than 20 wk accepted skin grafts. T cells from younger CD2Kb mice proliferated, but did not develop cytotoxic functions in vitro in response to H-2Kb. Proliferative responses were dominated by H-2Kb-specific, CD4+ T cells rather than CD8+ T cells. Representative CD4+ T cell clones from CD2Kb mice were MHC II restricted and recognized processed H-2Kb. TCR transgenic mice were generated from one CD4+ T cell clone (361) to monitor development of H-2Kb-specific immature thymocytes when all thymic cells or lymphoid cell lineages only expressed H-2Kb. Thymocyte precursors were not eliminated and mice were not tolerant to H-2Kb when Tg361 TCR transgenic mice were intercrossed with CD2Kb mice. In contrast, all thymocyte precursors were eliminated efficiently in thymic microenvironments in which all cells expressed H-2Kb. We conclude that self MHC I Ags expressed exclusively in thymocytes do not induce T cell tolerance because presentation of processed self MHC I Ags on self MHC II molecules fails to induce negative selection of CD4+ T cell precursors. This suggests that some self Ags are effectively compartmentalized and cannot induce self-tolerance in the T cell repertoire.