The thymus and parathyroid glands arise from a shared endodermal primordium in the third pharyngeal pouch (3rd pp). Thymus fate is specified in the ventral 3rd pp between E9.5 and E11, whereas parathyroid fate is specified in the dorsal domain. The molecular mechanisms that specify fate and regulate thymus and parathyroid development are not fully delineated. Previous reports suggested that Tbx1 is required for thymus organogenesis because loss of Tbx1 in individuals with DiGeorge syndrome and in experimental Tbx1 deletion mutants is associated with thymus aplasia or hypoplasia. However, the thymus phenotype is likely to be secondary to defects in pharyngeal pouch formation. Furthermore, the absence of Tbx1 expression in the thymus-fated domain of the wild-type 3rd pp suggested that Tbx1 is instead a negative regulator of thymus organogenesis. To test this hypothesis, we generated a novel mouse strain in which expression of a conditional Tbx1 allele was ectopically activated in the thymus-fated domain of the 3rd pp. Ectopic Tbx1 expression severely repressed expression of Foxn1, a transcription factor that marks the thymus-fated domain and is required for differentiation and proliferation of thymic epithelial cell (TEC) progenitors. By contrast, ectopic Tbx1 did not alter the expression pattern of Gcm2, a transcription factor restricted to the parathyroid-fated domain and required for parathyroid development. Ectopic Tbx1 expression impaired TEC proliferation and arrested TEC differentiation at an early progenitor stage. The results support the hypothesis that Tbx1 negatively regulates TEC growth and differentiation, and that extinction of Tbx1 expression in 3rd pp endoderm is a prerequisite for thymus organogenesis.