Foxn1Δ is a hypomorphic allele of the nude gene that causes arrested thymic epithelial cell differentiation and abnormal thymic architecture lacking cortical and medullary domains. T cells develop in the Foxn1Δ/Δ adult thymus to the double- and single-positive stages, but in the apparent absence of double-negative 3 (DN3) cells; however, DN3 cells are present in the fetal thymus. To investigate the origin of this seemingly contradictory phenotype, we performed an analysis of fetal and adult DN cells in these mutants. Neither adult bone marrow-derived cells nor fetal liver cells from wild-type or Rag1-/- mice were able to differentiate to the DN2 or DN3 stage in the Foxn1Δ/Δ thymus. Our data suggest that thymopoiesis in the Foxn1Δ/Δ adult thymus proceeds from CD117- atypical progenitors, while CD117+ DN1a cells are absent or blocked in their ability to differentiate to the T lineage. Wild-type cells generated by this pathway in the postnatal thymus were exported to the periphery, demonstrating that these atypical cells contributed to the peripheral T cell pool. The Foxn1Δ/Δ adult (but not fetal) thymus also preferentially supports B cell development, specifically of the B-1 type, and this phenotype correlated with reduced Notch ligand expression in the adult stroma.