Peptide loading onto MHC class II molecules takes place in endosomal compartments along the endocytic pathway. There, loading is facilitated by the catalytic function of the accessory molecule H2-M, which helps to exchange the invariant chain-derived CLIP peptide in the groove of class II molecules for antigenic peptide. H2-O is another accessory molecule specific to the class II pathway, which is found tightly associated with H2-M and selectively expressed in B cells. Using stable H2-O ribozyme-antisense transfectants, H2-O overexpressing murine B cell lines, and H2-O-transgenic mice, we investigated the effects of H2-O on antigen presentation. The results show that presentation of a variety of exogenous protein antigens to a panel of T cell hybridomas depended on the levels of H2-O in the antigen-presenting B cells. Thus, increased H2-O expression downmodulated, whereas reduced H2-O levels, enhanced presentation. Presentation of endogenous antigen was also diminished by H2-O. Despite the pronounced effects on antigen presentation, the mass spectrometric profiles of peptides eluted from Ab molecules were very similar in cells expressing different H2-O levels. The intracellular location of H2-O inhibitory activity was investigated with the drug chloroquine, which prevents acidification of the endocytic pathway. The observations indicate that H2-O predominantly inhibits antigen presentation in early endosomal compartments. Thus, H2-O appears to skew peptide loading to late endosomal/lysosomal compartments. This may favor presentation of antigens taken up by the B cell receptor.