Thymic epithelial cells (TECs) are one of the most important components in thymic microenvironment supporting thymocyte development and maturation. TECs, composed of cortical and medullary TECs, are derived from a common bipotent progenitor, mediating thymocyte positive and negative selections. Multiple levels of signals including intracellular signaling networks and cell-cell interaction are required for TEC development and differentiation. Transcription factors Foxn1 and autoimmune regulator (Aire) are powerful regulators promoting TEC development and differentiation. Crosstalks with thymocytes and other stromal cells for extrinsic signals like RANKL, CD40L, lymphotoxin, fibroblast growth factor (FGF) and Wnt are also definitely required to establish a functional thymic microenvironment. In this review, we will summarize our current understanding about TEC development and differentiation, and its underlying multiple signal pathways.