Transgenic mice expressing an alloreactive TCR specific for the MHC class I Ag K b were used to examine the mechanism by which genetic engineering of bone marrow induces T cell tolerance. Reconstitution of lethally irradiated mice with bone marrow infected with retroviruses carrying the MHC class I gene H-2K b resulted in lifelong expression of K b on bone marrow-derived cells. While CD8 T cells expressing the transgenic TCR developed in control mice reconstituted with mock-transduced bone marrow, CD8 T cells expressing the transgenic TCR failed to develop in mice reconstituted with H-2K b transduced bone marrow. Analysis of transgene-expressing CD8 T cells in the thymus and periphery of reconstituted mice revealed that CD8 T cells expressing the transgenic TCR underwent negative selection in the thymus of mice reconstituted with K b transduced bone marrow. Negative selection induced by gene therapy resulted in tolerance to K b. Thus, genetic engineering of bone marrow can be used to alter T cell education in the thymus by inducing negative selection.