The thymus is a complex epithelial organ in which thymocyte development is dependent upon the sequential contribution of morphologically and phenotypically distinct stromal cell compartments. It is these microenvironments that provide the unique combination of cellular interactions, cytokines, and chemokines to induce thymocyte precursors to undergo a differentiation program that leads to the generation of functional T cells. Despite the indispensable role of thymic epithelium in the generation of T cells, the mediators of this process and the differentiation pathway undertaken by the primordial thymic epithelial cells are not well defined. There is a lack of lineage-specific cell-surface-associated markers, which are needed to characterize putative thymic epithelial stem cell populations. This review explores the role of thymic stromal cells in T-cell development and thymic organogenesis, as well as the molecular signals that contribute to the growth and expansion of primordial thymic epithelial cells. It highlights recent advances in these areas, which have allowed for a lineage relationship amongst thymic epithelial cell subsets to be proposed. While many fundamental questions remain to be addressed, collectively these works have broadened our understanding of how the thymic epithelium becomes specialized in the ability to support thymocyte differentiation. They should also facilitate the development of novel, rationally based therapeutic strategies for the regeneration and manipulation of thymic function in the treatment of many clinical conditions in which defective T cells have an important etiological role.