The Paneth cell lineage is one of four epithelial lineages derived from the adult mouse small intestine's multipotent stem cell. Mature Paneth cells secrete anti-microbial peptides (cryptdins), growth factors, as well as two gene products, a secreted phospholipase A2 and matrilysin, that has been implicated as modifiers of adenoma formation in mice containing a mutation in the tumor suppressor Apc. Immature Paneth cells are located just above and below the cell layer, in intestinal crypts, that has been proposed to contain the multipotent stem cell. Paneth cells differentiate during a downward migration to the crypt base. The location and direction of Paneth cell migration, their high density and long residency time at the crypt base, and the nature of their secreted gene products, suggest that they may influence the structure and/or function of the stem cell niche. Paneth cell ablation can therefore be viewed as an experimental manipulation of the cellular microenvironment that purportedly contains the stem cell and its immediate descendants. Two types of ablation experiments were performed in transgenic mice. Nucleotides -6500 to +34 of the mouse cryptdin-2 gene (CR2) were used to express an attenuated diphtheria toxin A fragment. Light and electron microscopic immunohistochemical analyses of several pedigrees of postnatal day 28 to 180 animals established that ablation of Paneth cells is accompanied by an increase in the proportion of undifferentiated crypt base columnar cells. These cells normally co-exist with Paneth cells. The ablation does not produce a detectable effect on the proliferation or terminal differentiation programs of the other three lineages or on host-microbial interactions. The last conclusion is based on the ability of crypts to remain free of microbes detectable by Gram and Warthin-Starry stains and by retention of the normal crypt-villus distribution of components of the diffuse gut-associated lymphoid tissue. CR2-directed expression of simian virus 40 large T antigen also results in a loss of mature Paneth cells but produces a marked amplification of crypt cells having a morphology intermediate between Paneth and granule goblet cells. EM immunohistochemical analyses suggest that intermediate cells can differentiate to mature goblet cells but not to Paneth cells, as they migrate up the crypt-villus axis. Our findings suggest that (i) stemnness in the crypt is not defined by instructive interactions involving the Paneth cell; (ii) expressing a Paneth cell fate may require that precursors migrate to the crypt base; (iii) antimicrobial factors produced by Paneth cells are not required to prevent colonization of small intestinal crypts; and (iv) this lineage does not function to maintain the asymmetric crypt-villus distribution of components of the diffuse gut-associated lymphoid tissue.