The etiology of autoimmune liver disease is poorly understood. BALB/c mice deficient in the immunoregulatory cytokine TGF-beta1 spontaneously develop necroinflammatory liver disease, but the immune basis for the development of this pathology has not been demonstrated. Here, we show that BALB/c-TGF-beta1(-/-) mice exhibit abnormal expansion in hepatic mononuclear cells (MNCs) compared with wild-type littermate control mice, particularly in the T cell and macrophage lineages. To test whether lymphocytes of the adaptive immune system are required for the spontaneous development of necroinflammatory liver disease, BALB/c-TGF-beta1(-/-) mice were rendered deficient in B and T cells by crossing them with BALB/c-recombinase-activating gene 1(-/-) mice. BALB/c-TGF-beta1(-/-)/recombinase-activating gene 1(-/-) double-knockout mice showed extended survival and did not develop necroinflammatory liver disease. The cytolytic activity of BALB/c-TGF-beta1(-/-) hepatic lymphocytes was assessed using an in vitro CTL assay. CTL activity was much higher in BALB/c-TGF-beta1(-/-) hepatic MNCs compared with littermate control hepatic MNCs and was particularly pronounced in the CD4(+) T cell subset. Experimental depletion of CD4(+) T cells in young BALB/c-TGF-beta1(-/-) mice prevented the subsequent development of necroinflammatory liver disease, indicating that CD4(+) T cells are essential for disease pathogenesis in vivo. These data definitively establish an immune-mediated etiology for necroinflammatory liver disease in BALB/c-TGF-beta1(-/-) mice and demonstrate the importance of CD4(+) T cells in disease pathogenesis in vivo. Furthermore, TGF-beta1 has a critical role in homeostatic regulation of the hepatic immune system, inhibiting the development or expansion of hepatic cytolytic CD4(+) T cells.