The roles of autoimmune regulator (Aire)-expressing medullary thymic epithelial cells (mTECs) in the organization of the thymic microenvironment for establishing self-tolerance are enigmatic. We sought to monitor the production and maintenance of Aire-expressing mTECs by a fate-mapping strategy in which bacterial artificial chromosome transgenic (Tg) mice expressing Cre recombinase under the control of the Aire regulatory element were crossed with a GFP reporter strain. We found that, in addition to its well recognized expression within mature mTECs, Aire was expressed in the early embryo before emergence of the three germ cell layers. This observation may help to explain the development of ectodermal dystrophy often seen in patients with AIRE deficiency. With the use of one Tg line in which Cre recombinase expression was confined to mTECs, we found that Aire(+)CD80(high) mTECs further progressed to an Aire(-)CD80(intermediate) stage, suggesting that Aire expression is not constitutive from after its induction until cell death but instead is down-regulated at the beginning of terminal differentiation. We also demonstrated that many mTECs of Aire-expressing lineage are in close contact with thymic dendritic cells. This close proximity may contribute to transfer of tissue-restricted self-antigens expressed by mTECs to professional antigen-presenting cells.