The major histocompatibility complex (MHC) class Ib molecule H2-M3 binds N-formylated peptides from mitochondria and bacteria. To explore the role of M3 expression and peptide supply in positive and negative selection, we generated transgenic mice expressing an M3-restricted TCR-α/β from a CD8+ T cell hybridoma (D7) specific for a listerial peptide (LemA). Development of M3-restricted transgenic T cells is impaired in both β2-microglobulin–deficient and transporter associated with antigen processing (TAP)-deficient mice, but is not diminished by changes in the H-2 haplotype. Maturation of M3/LemA-specific CD8+ single positive cells in fetal thymic organ culture was sensitive to M3 expression levels as determined by antibody blocking and use of the castaneus mutant allele of M3. Positive selection was rescued in TAP−/− lobes by nonagonist mitochondrial and bacterial peptides, whereas LemA and a partial agonist variant caused negative selection. Thus, M3-restricted CD8+ T cells are positively and negatively selected by M3, with no contribution from the more abundant class Ia molecules. These results demonstrate that class Ib molecules can function in thymic education like class Ia molecules, despite limited ligand diversity and low levels of expression.