Tid1, a DnaJ cochaperone protein, is the mammalian homologue of the Drosophila tumor suppressor Tid56 whose antitumor function is most likely mediated through its capacity to regulate cell differentiation in imaginal discs. We suspected that the mammalian counterpart, tid1, may also be involved in regulating cell differentiation. To investigate this, we exploited the system of T cell development to examine whether tid1 plays a role in this well-defined process. Mice with tid1 specifically deleted in T cells developed thymic atrophy, with dramatic reduction of double-positive and single-positive thymocytes in the tid1(-/-) thymus. Although the subpopulations of tid1(-/-) double-negative (DN) 1-3 thymocytes were normal, the subpopulation of DN4 thymocytes was measurably smaller because of reduced proliferation and significant cell death. Immature tid1(-/-) thymocytes show normal VDJ beta-chain rearrangement and pre-TCR and CD3 expression in both DN3 and DN4 thymocytes, but in DN4 thymocytes, there was significantly reduced expression of the antiapoptotic bcl-2 gene. Restoring the expression level of Bcl-2 protein in tid1(-/-) thymus by introduction of a transgenic human bcl-2 gene resulted in reversal of the developmental defects in tid1(-/-) thymus. Together, these results demonstrate that tid1 is critical in early thymocyte development, especially during transition from the DN3 to double-positive stages, possibly through its regulation of bcl-2 expression, which provides survival signals.