The development of T cells from pluripotent stem cells involves a coordinated series of lineage-commitment steps. Common lymphoid precursors in the fetal liver or adult bone marrow must first choose between a T, B or NK cell fate. Committed T cell precursors in the thymus then differentiate into cells committed to the alphabeta or gammadelta lineages. Recent advances have been made in our understanding of the mechanisms underlying T cell fate specification and alphabeta/gammadelta lineage divergence.