Diacylglycerol (DAG) kinases (DGKs) are a family of enzymes that convert DAG to phosphatidic acid (PA), the physiologic functions of which have been poorly defined. We report here that DGK alpha and zeta synergistically promote T cell maturation in the thymus. Absence of both DGKalpha and zeta (DGKalpha(-/-)zeta(-/-)) results in a severe decrease in the number of CD4(+)CD8(-) and CD4(-)CD8(+) single-positive thymocytes correlating with increased DAG-mediated signaling. Positive selection, but not negative selection, is impaired in DGKalpha(-/-)zeta(-/-) mice. The developmental blockage in DGKalpha(-/-)zeta(-/-) mice can be partially overcome by treatment with PA. Furthermore, decreased DGK activity also promotes thymic lymphomagenesis accompanying elevated Ras and Erk1/2 activation. Our data demonstrate a synergistic and critical role of DGK isoforms in T cell development and tumor suppression, and indicate that DGKs not only terminate DAG signaling but also initiate PA signaling in thymocytes to promote positive selection.