The nonpolymorphic human class II molecule HLA-DM (DM) has been found to play a key role in antigen presentation by MHC class II molecules. HLA-DM and its murine equivalent H2-M are located intracellularly and are absent from the cell surface. In transfected HeLa cells, H2-M was transported to an endosomal compartment in the absence of invariant chain. A tyrosine-based targeting motif in the cytoplasmic tail of H2-M beta was responsible for the endosomal location and, if this tyrosine was mutated, H2-M accumulated at the cell surface. In the presence of invariant chain the mutated H2-M was redistributed to endosomes. The targeting motif of H2-M appeared not to be crucial for efficient peptide loading of class II, but if the invariant chain targeting motif also was removed, peptide loading decreased drastically. Thus, the targeting motif of H2-M appears to be supplementary, rather than essential for class II-peptide association.