Mice rendered deficient in lymphotoxin (LT) by gene targeting in embryonic stem cells have no morphologically detectable lymph nodes or Peyer's patches, although development of the thymus appears normal. Within the white pulp of the spleen, there is failure of normal segregation of B and T cells. Spleen and peripheral blood contain CD4+CD8- and CD4-CD8+ T cells in a normal ratio, and both T cell subsets have an apparently normal lytic function. Lymphocytes positive for immunoglobulin M are present in increased numbers in both the spleen and peripheral blood. These data suggest an essential role for LT in the normal development of peripheral lymphoid organs.