The murine CD4- CD8- (double negative, DN) thymocyte cell line and clones expressing T cell receptor gamma delta chains in association with CD3 complex have been established and characterized. This line and a representative clone (DN7.12.11) which appear to derive from the minor population of CD3+ DN thymocytes can be stimulated to proliferate and to produce lymphokines by anti-CD3 or anti-Thy-1 antibodies or calcium ionophore plus phorbol ester. Autocrine proliferation is dependent on binding of interleukin (IL)2 to functional IL2 receptor. Upon stimulation, these cells produce IL2 and IFN-gamma but not IL4, resembling conventional CD4+ TH1 cells in this regard. The cloned line also mediates spontaneous cytolysis against a variety of tumor targets without regard for the presence of conventional major histocompatibility complex molecules on the target cell surface. Blocking and modulation experiments suggest that target recognition by the gamma delta/CD3 complex is not involved in the spontaneous lysis, resembling natural killer (NK) cells. The results suggest that gamma delta +DN T cells are able to have mature functions such as NK-like cytotoxicity and lymphokine secretion as peripheral gamma delta +T cells. They also provide a possible role of gamma delta + DN thymocytes in establishing a intrathymic environment for differentiation and selection of alpha beta-expressing T cells.