Foxn1Δ/Δ mutants have a block in thymic epithelial cell differentiation at an intermediate progenitor stage, resulting in reduced thymocyte cellularity and blocks at the double-negative and double-positive stages. Whereas naive single-positive thymocytes were reduced >500-fold in the adult Foxn1Δ/Δ thymus, peripheral T cell numbers were reduced only 10-fold. The current data shows that Foxn1 Δ/Δ peripheral T cells had increased expression of activation markers and the ability to produce IL-2 and IFN-γ. These cells acquired this profile immediately after leaving the thymus as early as the newborn stage and maintained high steady-state proliferation in vivo but decreased proliferation in response to TCR stimulation in vitro. Single-positive thymocytes and naive T cells also had constitutively low αβTCR and IL7R expression. These cells also displayed reduced ability to undergo homeostatic proliferation and increased rates of apoptosis. Although the frequency of Foxp3+CD4+CD25+ T cells was normal in Foxn1Δ/Δ mutant mice, these cells failed to have suppressor function, resulting in reduced regulatory T cell activity. Recent data from our laboratory suggest that T cells in the Foxn1 Δ/Δ thymus develop from atypical progenitor cells via a noncanonical pathway. Our results suggest that the phenotype of peripheral T cells in Foxn1Δ/Δ mutant mice is the result of atypical progenitor cells developing in an abnormal thymic microenvironment with a deficient TCR and IL7 signaling system.