AT cell-specific Ly-49A transgene inhibits TCR-mediated activation in the presence of H-2D d. Expression of this transgene by developing thymocytes impairs negative selection evidenced by a failure to delete potentially autoreactive T cells and development of a graft-vs-host-disease-like syndrome. In mice carrying both the Ly-49A and a class II-restricted TCR transgene, positive selection was lost, but only when H-2D d was present on thymic epithelium. These results are consistent with models suggesting that thymic selection is dependent on the perceived intensity of TCR signaling. More interestingly, these results show that Ly-49A does not simply provide a strict on/off switch for T cell responses. Since Ly-49A may shift the signaling threshold of TCR-induced triggering, inducible expression of Ly-49A may regulate peripheral memory/activated T cells by raising the threshold for T cell reactivation.