T cells are produced through 2 mechanisms, thymopolesis and proliferative expansion of postthymic T cells. Thymic output generates diversity of the pool, and proliferation achieves optimal clonal size of each individual T cell. To determine the contribution of these 2 mechanisms to the formation of the initial T-cell repertoire, we examined neonates of 30 to 40 weeks' gestation. Peripheral T cells were in a state of high proliferative turnover. In premature infants, 10% of T cells were dividing; the proliferation rates then declined but were still elevated in mature newborns. Throughout the third trimester, concentrations of T-cell-receptor excision circles (TRECs) were 10 per 100 T cells. Stability of TREC frequencies throughout the period of repertoire generation suggested strict regulation of clonal size to approximately 10 to 20 cells. Neonatal naive CD4+ and CD8+ T cells were explicitly responsive to IL-7, growth-promoting properties of IL-15 were selective for newborn CD8+ T cells. Neonatal T cells expressed telomerase and, in spite of the high turnover, built up a telomeric reserve. Thus, proliferative expansion, facilitated by increased cytokine responsiveness, and thymopoiesis complement each other as mechanisms of T-cell production in neonates. Maintaining optimal clonal size instead of filling the space in a lymphopenic host appears to regulate homeostatic T-cell proliferation during fetal development.