Transgenic CBA (H-2k haplotype) mice expressing the H-2 Kb major histocompatibility complex (MHC) class I gene under control of transcriptional promoter elements from a milk protein gene display high-level H-2 Kb transcription in lactating mammary glands and low-level transcription in skin and thymus of male and virgin female transgenic mice. However, H-2 Kb antigen could be detected only in lactating mammary gland epithelial cells by immunohistological methods. All transgenic mice are tolerant of H-2 Kb since they fail to reject skin grafts from mice expressing H-2 Kb molecules. Furthermore, anti-H-2 Kb cytotoxic responses could not be generated using responder T cells from transgenic mice but T cells from the same mice proliferated, in the presence of interleukin-2, in response to stimulator cells expressing H-2 Kb. Tolerance to H-2 Kb is induced in the thymus since CBA mice grafted with thymus tissue from transgenic mice fail to reject H-2 Kb disparate skin grafts. However, experiments with double-transgenic mice also expressing a T cell receptor with anti-H-2 Kb specificity reveal that tolerance induction is not brought about by elimination of thymocytes bearing H-2 Kb-reactive receptors. Instead, a non-deletional mechanism which results in down-modulation of both CD8 and T cell receptor expression in peripheral T cells correlates with the induction of tolerance in these mice. These data reveal that extremely low levels of self-antigen expression in the thymus are sufficient to induce tolerance via non-deletional mechanisms.