We describe a novel approach to assay the ability of particular gene products to signal transitions in lymphocyte differentiation in vivo. The method involves transfection of test expression constructs into RAG-1-deficient embryonic stem cells, which are subsequently assayed by the RAG-2-deficient blastocyst complementation approach. We have used this method to demonstrate that expression of activated Ras in CD4-8- (double negative, DN) prothymocytes in vivo induces their differentiation into small CD4+8+ (double positive, DP) cortical thymocytes with accompanying expansion to normal thymocyte numbers. However, activated Ras expression in DP cells does not cause proliferation or maturation to CD4+8- or CD4-8+ (single positive) thymocytes. Therefore, signaling through Ras is sufficient for promoting differentiation of DN to DP cells, but further differentiation requires the activity of additional signaling pathways.