We characterized the distribution of CD40 and CD40 ligand (CD40-L) in the adult and developing murine thymus. Before birth, CD40 was almost exclusively localized to scattered foci of medullary cells. By birth there was a dramatic upregulation of CD40 expression by cortical epithelial cells, which was accompanied by a consolidation of medullary epithelial foci. CD40-L+ thymocytes displayed a medullary location. Analysis of mice deficient in CD40-L expression indicated that CD40-L/CD40 interactions were not required for development of the medullary compartment. Overexpression of CD40-L targeted to thymocytes altered thymic architecture, as reflected by a dramatic loss of cortical epithelial cells, expansion of the medullary compartment, and extensive infiltration of the capsule with a mixture of CD3+ cells, B-cells, and macrophages/dendritic cells. Reconstitution of lethally irradiated normal mice with lck CD40-L bone marrow cells also resulted in loss of cortical epithelium and expansion of the medullary compartment. Disruption of the normal pattern of thymic architecture and epithelial differentiation as a consequence of increased intrathymic levels of CD40-L expression points to a role for CD40-L/CD40 interactions in the normal pattern of epithelial compartmentalization/differentiation within the thymic environment.