Although the functional aspects of the alpha beta T cell antigen receptor (TCR) found on most peripheral T cells are well described, the function of the gamma delta TCR remains unclear. Murine intraepithelial lymphocytes (IEL) of the small intestine are CD8+, express the gamma delta TCR, and are constitutively lytic. Fresh IEL from germ-free mice had no lytic activity. Moreover, whereas IEL from normal mice are 30 to 50 percent Thy-1+, IEL from germ-free did not express Thy-1. Acclimation of germ-free mice to nonsterile conditions resulted in the generation of Thy-1+ IEL and induction of lytic activity. Thus CD8+ TCR-gamma delta IEL were regulated by externally derived stimuli via a specific functional interaction between IEL and gut-associated antigens.