HMG protein Tox4 is a regulator of PP1 phosphatases with unknown function in development. Here we show that Tox4 conditional knockout in mice reduces thymic cellularity, partially blocks T cell development, and decreases ratio of CD8 to CD4 through decreasing proliferation and increasing apoptosis of CD8 cells. In addition, single-cell RNA-seq discovered that Tox4 loss also impairs proliferation of the fast-proliferating double positive (DP) blast population within DP cells in part due to downregulation of genes critical for proliferation, notablyCdk1. Moreover, genes with high and low expression level are more dependent on Tox4 than genes with medium expression level. Mechanistically, Tox4 may facilitate transcriptional reinitiation and restrict elongation in a dephosphorylation-dependent manner, a mechanism that is conserved between mouse and human. These results provide insights into the role of TOX4 in development and establish it as an evolutionarily conserved regulator of transcriptional elongation and reinitiation.