The Thy-1 antigen is a cell-surface glycoprotein of unknown function expressed on mouse T lymphocytes, neurons, and hematopoietic stem cells. To alter the normal pattern of Thy-1 expression during hematopoietic differentiation, we created transgenic mice using a hybrid Thy-1 gene containing a transcriptional enhancer of the mouse immunoglobulin heavy chain gene (E mu). Strains of mice bearing the Thy-1.2/E mu gene express the Thy-1.2 antigen on mature B lymphocytes and their progenitors, and develop a heritable lymphoid hyperplasia characterized by massive expression of the Thy-1.2 antigen in the bone marrow and lymph nodes. The phenotype associated with inappropriate developmental regulation of the Thy-1 gene suggests that the Thy-1 antigen may play a role in inducing activation or differentiation events on early lymphocyte progenitor cells.