Embryonic stem cells (ESCs) have the potential to serve as a renewable source of transplantable tissue-specific stem cells. However, the molecular cues necessary to direct the differentiation of ESCs toward specific cell lineages remain obscure. Here we report the successful induction of ESC differentiation into mature functional T lymphocytes with a simple in vitro coculture system. The directed differentiation of ESCs into T cells required the engagement of Notch receptors by Delta-like 1 ligand (DL1) expressed on the OP9-DL1 stromal cell line. We found a normal program of T cell differentiation in ESC–OP9-DL1 cell cocultures. ESC-derived T cell progenitors effectively reconstituted the T cell compartment of immunodeficient mice, enabling an effective response to a viral infection. These findings provide a powerful tool for the molecular analysis of T cell development and open new avenues for the development of immunotherapeutic approaches using defined sources of stem cells.