The establishment of a functional immune system with diverse antigen receptors is dependent on the V(D)J recombination activating gene products Rag-1 and Rag-2. These two proteins constitute the key lymphoid components required for the activation of antigen receptor rearrangement. Both Rag-1 and Rag-2 are required for the catalysis of the initial stages of V(D)J recombination. Thus, functional disruption of either the Rag-1 or Rag-2 genes by homologous recombination, leads to immunodeficiency due to lymphoid arrest at a stage prior to the recombination of the antigen receptor loci. In Rag-deficient mice, both B- and T-cell differentiation is eliminated due to the absence of antigen receptors. Lymphoid development can be restored by the introduction of rearranged antigen receptor transgenes that give rise to monoclonal populations of fully mature B- or T-cells. The absence of the major conventional populations of B- and T-cells from the Rag-deficient mice provided an excellent background for studying the molecular and cellular mechanisms of lymphoid differentiation. The Rag-deficient background has been used as a system for: the functional analysis of Rag-1 and Rag-2; studying the developmental functions of antigen receptors and other molecules of the immune system; the molecular analysis of the early stages of the B- and T-cell lineages; the co-development of lymphocytes with stroma cells; the identification of minor subpopulations of the developing immune system; the involvement of lymphoid populations in the onset of pathogenesis. In addition, the development of the“blastocyst complementation assay”methodology, based on the phenotype of the Rag−/−mice, allowed the functional analysis of numerous lymphoid specific components.