Transgenic mice expressing LMO-2 (rhombotin-2) were constructed by placing the LMO-2 gene under control of the metallothionein promoter. Thymic tumors developed in approximately 15% of the transgenic mice between 37 and 71 weeks. Only T-cell tumors were found in the transgenic mice despite high expression of LMO-2 in all tissues. The thymic tumors were aggressive and were invariably associated with metastasis to non-lymphoid organs. In approximately 50% of apparently healthy transgenic mice there was up to a 10-fold expansion of CD4-CD8- double negative (DN) cells. Expansion of the DN cells was accompanied by the compensatory decrease in CD4+CD8+ double positive (DP) cells, indicating that breach of homeostasis within the thymus had not occurred in these animals. The increase in DN cells was associated with a clonal expansion of thymocytes, and increased proliferation within the thymus. Our data indicate that the ectopic expression of LMO-2 in T-cells disrupts normal T-cell differentiation by selectively expanding the DN thymocyte population prior to breach of homeostasis and overt leukemia/lymphoma.