IL-7 is a keratinocyte-derived lymphocyte growth factor critical for the development of gammadelta T cells including murine dendritic epidermal T cells (DETC). We derived transgenic mice that overexpress IL-7 in basal keratinocytes under the control of the human K14 promoter. These K14/IL-7 mice develop dermal and epidermal T cell infiltrates associated with alopecia. This lymphoproliferative skin disease is substantially more severe in mice homozygous for the K14/IL-7 transgene. Conventional DETC expressing a Vgamma5 Vdelta1 TCR are rare or absent among the cutaneous T cells in these mice. The T cells in the skin infiltrates of young K14/IL-7 mice are predominantly gammadelta T cells that express intermediate levels of TCR, are negative for E-cadherin, often lack expression of CD2, and include cells that coexpress NK1.1. T cells expressing intermediate levels of a TCR-alphabeta are also present in transgenic skin, and progressively increase in number as the mice age. Phenotypically similar intermediate gammadelta and alphabeta T cell subsets also constitute the major lymphocyte populations recovered from organ culture of normal mouse skin in the presence of IL-7, suggesting that the T cells that accumulate in the epidermis of K14/IL-7 mice are derived from precursors normally resident in skin. We conclude that intermediate TCR cells, some of which coexpress NK1.1, can be selectively expanded in skin under the influence of IL-7 produced locally. Our results also suggest that features of the epidermal microenvironment besides keratinocyte-derived IL-7 account for the normal predominance of Vgamma5 Vdelta1 DETC in mouse epidermis.