The fetal liver chimera system was used as a model to study the nature of transplantation tolerance in radiation chimeras. A permanent state of tolerance was induced in (C3H/eb times C57BL/6)F1 irradiated mice after reconstitution with parental C57BL/6 fetal or neonatal liver cells. It was found that although enough host hemopoietic cells were present in such chimeras to provide antigenic stimulation, subsequent inoculation of these chimeras with C57BL/6 immunocompetent cells syngeneic to liver donor cells specifically abolished their response against the host. In addition, cells obtained from liver chimeras after their challenge with C57BL cells were unable to produce a graft-versus-host response upon transfer to (C3H/eb times C57BL/6)F1 newborn mice. Transfer of serum of these mice could not prevent immune reactivity of syngeneic C57BL/6 cells neither in the graft-versus-host nor in the mixed lymphocyte culture assays. These observations are compatible with the hypothesis that suppressor cells may differentiate within the fetal liver, which specifically inhibits the immune reactivity of syngeneic cells, and thus leads to the establishment of tolerance.