We have previously established conditions under which murine yolk sac cells can be maintained in vitro in the absence of thymus, and we reported that a spontaneously transformed Thy1.2+ yolk sac cell line was obtained after long term culture in vitro. We now provide further phenotypic characterization of a clone, YSA1, of this Thy1.2+ cell line showing that it expresses Thy1.2, CD3/TCR Vbeta8, IL-2 receptor (IL2R), and heat stable antigen (HSAg), but does not express CD4/CD8 or TCR gammadelta. The YSA1 clone is an immature cell as indicated by the expression of IL2R and HSAg and by nonproduction of IL-2 upon stimulation by anti-CD3 antibody. The data show that yolk sac stem cells can differentiate into CD3/TCR expressing cells in the absence of thymus, but do not progress in vitro paralleling observations made on freshly-isolated yolk sac stem cells.