T cell development depends critically on several distinct thymic epithelial cell types that are organized into two main compartments: cortex and medulla. The prevailing hypothesis suggests that these derive from ectoderm and endoderm, respectively. Here we show that lineage analysis provides no evidence for an ectodermal contribution to the thymic rudiment. We further demonstrate, via ectopic transplantation, that isolated pharyngeal endoderm can generate a functional thymus containing organized cortical and medullary regions and that this capacity is not potentiated by the presence of pharyngeal ectoderm. These data establish that the cortical and medullary thymic epithelial compartments derive from a single germ layer, the endoderm, thus refuting the 'dual-origin' model of thymic epithelial ontogeny.