We show that thymic epithelial cells grown under serum-free conditions in a chemically defined culture medium can act as veto cells in vitro. The veto activity of thymic epithelial cells results in inactivation of specific alloreactive cytotoxic T-cell precursors at the clonal level. It is concluded that the epithelial stromal cells of the thymus, by acting as veto cells, may be responsible for the negative intrathymic selection of self-reactive thymocytes leading to elimination of the vast majority of immature thymic lymphocytes.