This study documents failure of peripheral tolerance mechanisms in a chronic viral infection and shows that T cell tolerance to a viral Ag seen as self from fetal life can be broken despite the presence of this Ag in extrathymic tissues. Congenital infection of mice with lymphocytic choriomeningitis virus (LCMV) results in T cell tolerance to the virus. Such mice become carriers for life harboring virus in many tissues including the thymus and exhibit no LCMV-specific CTL responses. Our previous studies have documented the curing of this congenitally acquired chronic infection after adoptive transfer of CD8+ T cells from LCMV-immune mice and the presence of host-derived, LCMV-specific CTL in these "cured" carriers. In this study we have examined the mechanism by which these carriers acquired T cell competence and show that these CTL differentiated from the bone marrow after elimination of viral Ag from the thymus. These results demonstrate that even when a chronic infection has been established in utero, the adult thymus retains the ability to restore immunocompetence to the host and to provide protection against reinfection. Surprisingly, these LCMV specific CTL were acquired at a time when infectious virus and intracellular viral Ag, although cleared from the thymus, were readily detectable in organs such as the kidney, testes, and brain. In fact, active viral replication in peripheral tissues was ongoing when these mice acquired new virus-specific T cells. These results show that clearance of virus form the thymus was sufficient to abrogate tolerance to a congenitally acquired chronic infection and that Ag in peripheral tissues did not tolerize newly developing T cells. These findings suggest that mechanisms that operate on immature cells within the thymus to silence self-reactive T cells are effective in induction of tolerance to viruses, but mechanisms of tolerizing mature T cells are likely to breakdown. This has implications for virus-induced autoimmunity and for treatment of chronic infections.