Thymocytes bearing autoreactive T cell receptors (TCRs) are agonist-signaled by TCR/co-stimulatory molecules to either undergo clonal deletion or to differentiate into specialized regulatory T (T ) or effector T (T ) CD4 cells. How these different fates are achieved during development remains poorly understood. We now document that deletion and differentiation are agonist-signaled at different times during thymic selection and that T and T cells both arise after clonal deletion as alternative lineage fates of agonist-signaled CD4 CD25 precursors. Disruption of agonist signaling induces CD4 CD25 precursors to initiate Foxp3 expression and become T cells, whereas persistent agonist signaling induces CD4 CD25 precursors to become IL-2 T cells. Notably, we discovered that transforming growth factor-β induces Foxp3 expression and promotes T cell development by disrupting weaker agonist signals and that Foxp3 expression is not induced by IL-2 except under non-physiological in vivo conditions. Thus, TCR signaling disruption versus persistence is a general mechanism of lineage fate determination in the thymus that directs development of agonist-signaled autoreactive thymocytes.