We provide evidence that thymocytes receive signals from the thymic microenvironment which regulate the protein kinase C (PKC) signaling pathway. Thus, phorbol 12-myristate 13-acetate (PMA) causes a PKC-dependent down-regulation of CD4 expression and induces apoptosis in isolated thymocytes but has little effect on thymocytes maintained within intact thymic lobes or in reaggregate lobes containing purified thymocytes with either thymic or non-thymic stromal cells. Moreover, compact pellets of thymocytes alone are protected from the effects of PMA. This protection is maintained when the compacted thymocytes are rigorously depleted of MHC class II-expressing cells. We conclude that signals arising from thymocyte-thymocyte contact control the utilization of the PKC cascade. These observations have implications for thymocyte signaling in general as well as for the interpretation of studies carried out on thymocyte suspensions.