In antigen-presenting cells, class II molecules of the major histocompatibility complex (MHC) bind peptides derived from endocytosed proteins. In certain B-lymphoblastoid cell mutants, MHC class II molecule-peptide complex formation is impaired, resulting in deficient antigen-presenting function. MHC deletion mutants with this defect map the responsible gene(s) to the class II region of the MHC. Here we report that multiple independent mutants with the class II presentation defect harbour lesions in HLA-DMB, an MHC-linked gene encoding a class II-like beta-chain. Expression of DMB complementary DNA in mutants lacking DMB messenger RNA restores the wild-type phenotype. These results establish HLA-DM as a critical regulatory molecule in class II-restricted antigen presentation and suggest that it functions at an intracellular site to promote class II molecule-peptide association.