Somatic recombination of TCR genes in immature thymocytes results in some cells with useful TCR specificities, but also many with useless or potentially self-reactive specificities. Thus thymic selection mechanisms operate to shape the T-cell repertoire. Thymocytes that have a TCR with low affinity for self-peptide-MHC complexes are positively selected to further differentiate and function in adaptive immunity, whereas useless ones die by neglect. Clonal deletion and clonal diversion (Treg differentiation) are the major processes in the thymus that eliminate or control self-reactive T cells. Although these processes are thought to be efficient, they fail to control self-reactivity in all circumstances. Thus, peripheral tolerance processes exist wherein self-reactive T cells become functionally unresponsive (anergy) or are deleted after encountering self-antigens outside of the thymus. Recent advances in mechanistic studies of central and peripheral T-cell tolerance are promoting the development of therapeutic strategies to treat autoimmune disease and cancer and improve transplantation outcome.