HLA-DM (DM) facilitates peptide loading of major histocompatibility complex class II molecules in human cell lines. Mice lacking functional H2-M, the mouse equivalent of DM, have normal amounts of class II molecules at the cell surface, but most of these are associated with invariant chain-derived CLIP peptides. These mice contain large numbers of CD4+ T cells, which is indicative of positive selection in the thymus. Their CD4+ cells were unresponsive to self H2-M-deficient antigen-presenting cells (APCs) but were hyperreactive to wild-type APCs. H2-M-deficient APCs failed to elicit proliferative responses from wild-type T cells.