A repertoire of T cells is primarily formed in the thymus through positive and negative selection of developing thymocytes. The medullary region of the thymus provides a microenvironment that is essential for the establishment of self-tolerance via the depletion of self-reactive T cells and the production of regulatory T cells. Within the medullary microenvironment, medullary thymic epithelial cells play a pivotal role in the establishment of self-tolerance, via the promiscuous expression of tissue-restricted self-antigens and the chemokine-mediated attraction of positively selected T cells from the cortex to the medulla. Positive selection also induces the expression of TNF-superfamily cytokines and thereby nurtures the growth and development of medullary thymic epithelial cells. We will review the mechanisms of how the thymus contributes to the development and selection of T cells, with emphasis on the establishment of self-tolerance in the thymic medulla.