Functional mature T cells are generated in the thymus. Thymic epithelial cells (TECs) provide the essential microenvironment for T cell development and maturation. According to their function and localization, TECs are roughly divided into cortical TECs (cTECs) and medullary TECs (mTECs), which are responsible for positive and negative selection, respectively. This review summarizes the current understanding of TEC biology, the identification of fetal and adult bipotent TEC progenitors, and the signaling pathways that control the development and maturation of TECs. The understanding of the ontogeny, differentiation, maturation and function of cTECs lags behind that of mTECs. Better understanding TEC biology will provide clues about TEC development and the applications of thymus engineering.