Age-related thymic involution severely impairs immune responsiveness. Strategies to generate T cells extrathymically are therefore being explored with intense interest. We have demonstrated that T cells produced extrathymically were functionally deficient relative to thymus-derived T cells. The main limitation of extrathymic T cells is their undue susceptibility to apoptosis; they thus do not expand properly when confronted with pathogens. Using oncostatin M-transgenic mice, we found that in the absence of lymphopenia, T cells of extrathymic origin constitutively undergo excessive homeostatic proliferation that leads to overproduction of IL-2 and IFN-γ. IFN-γ up-regulates Fas and FasL on extrathymic CD8 T cells, thereby leading to their demise by Fas-mediated apoptosis. Moreover, IFN-γ and probably IL-2 curtail survival of extrathymic CD4 T cells by down-regulating IL-7Rα and Bcl-2, and they support a dramatic accumulation of FoxP3+ T regulatory cells. Additionally, we show that wild-type thymus-derived T cells undergoing homeostatic proliferation in a lymphopenic host shared key features of extrathymic T cells. Our work explains how excessive lymphopenia-independent homeostatic proliferation renders extrathymic T cells functionally defective. Based on previous work and data presented herein, we propose that extrathymic T cells undergo constitutive homeostatic proliferation because they are positively selected by lymph node hemopoietic cells rather than by thymic epithelial cells.