Bipotential T/natural killer (NK) progenitor cells are present in the human thymus. Despite their bipotential capacity, these progenitors develop predominantly to T cells in the thymus. The mechanisms controlling this developmental choice are unknown. Here we present evidence that a member(s) of the family of basic helix loop helix (bHLH) transcription factors determines lineage specification of NK/T cell progenitors. The natural dominant negative HLH factor Id3, which blocks transcriptional activity of a number of known bHLH factors, was expressed in CD34+ progenitor cells by retrovirus-mediated gene transfer. Constitutive expression of Id3 completely blocks development of CD34+ cells into T cells in a fetal thymic organ culture (FTOC). In contrast, development into NK cells in an FTOC is enhanced. Thus, the activity of a bHLH transcription factor is necessary for T lineage differentiation of bipotential precursors, in the absence of which a default pathway leading to NK cell development is chosen. Our results identify a molecular switch for lineage specification in early lymphoid precursors of humans.