In vivo and in vitro xenogeneic models have shown the ability of a non-human environment in supporting human haemopoiesis. In the present study, we evaluated the effect of fetal sheep thymic stroma in the in vitro development of natural killer (NK) cells from human haemopoietic progenitors. CD34+HLA-DR+ (CD34+ DR+)Lin- and CD34+DR-Lin- bone marrow (BM) progenitors were cultured for 3 weeks with or without interleukin 2 (IL-2), in fetal sheep thymic stroma contact and transwell cultures. Both progenitors gave rise to NK cells, defined as CD45+CD56+ cells, in the presence or absence of IL-2; however, the percentage of NK cells originated in cultures with IL-2 was significantly higher. Direct contact with stroma seemed to be required for the most immature progenitors, CD34+DR-Lin-, to differentiate along the NK cell lineage. Functional assays revealed that only cells grown in the presence of IL-2 were cytolytic against K562 targets and, curiously, NK cells derived from CD34+DR-Lin- progenitors were more cytotoxic that NK cells derived from CD34+DR+Lin- progenitors. These studies suggest that the ability of fetal sheep thymic stroma in promoting the generation of human NK cells from haemopoietic progenitors may have relevance in terms of NK cell ontogeny and induction of tolerance in transplantation.