Junctional diversity of fetal immunoglobulins is normally limited due to the lack of terminal deoxynucleotidyl transferase (Tdt) expression and N sequence addition in developing fetal B cells. To determine whether forced early Tdt expression can increase diversity and alter normal development of B cells, transgenic mice have been generated for both splice variants of Tdt (Tdt L and TdtS) under control of the Vh81X Ig promoter and IgH enhancer. Expression of each transgene in B cells can be demonstrated by RT-PCR and by staining for nuclear Tdt after LPS stimulation of adult splenocytes. Activity of the TdtS transgene, but not TdtL, can be demonstrated by the presence of N regions in rearranged Ig sequences from fetal liver as well as from adult bone marrow of Tdt transgenic (Tg) mice which have been bred to lack endogenous Tdt using a Tdt-deficient line. In one line of TdtS Tg mice, development of B lineage cells is blocked, as marked by a drastic reduction in the number of cytoplasmic Mu+ pre-B cells by gestational day 17 in Tg fetal liver. Other lines of TdtS transgenic mice as well as TdtL transgenic mice appear to be normal phenotypically. The immune response is qualitatively altered in TdtS transgenic lines when challenged with the antigen phosphorylcholine. This alteration occurs in both the phenotypically normal and phenotypically abnormal lines which supports the hypothesis that early N region addition has affected the development of the adult repertoire, independently of whether a loss of fetal B cells has occurred.