The biosynthesis of MHC class II/peptide complexes involves classical, cell surface MHC products as well as the intracellular component H2-M, required for the removal of invariant chain-derived CLIP and for peptide loading. The function of another intracellular class II heterodimer, H2-O, is the matter of some controversy. The physical association of H2-O with H2-M and co-localization in class II+ vesicles suggest a related function in peptide exchange. Furthermore, the distinctive thymic distribution of H2-O raises the possibility of a specialized role in T cell thymic selection. To investigate the role of H2-O in vivo we generated mice carrying a targeted disruption in the H2-Oa gene. No evidence was obtained for a defect in removal of CLIP. However, the array of endogenous peptides bound by class II was altered and a defect in antigen presentation through H2-A to T cells was seen on the 129/Sv/ C57BL/6 mixed strain background but not in 129/Sv pure strain mice. Furthermore, H2-O-null mice showed enhanced selection of CD4+ single positive thymocytes. The findings indicate that H2-O interacts with H2-M in peptide editing but that the genetic background in which H2-O deficiency is manifest is also important. Overall, the experiments indicate that H2-O/HLA-DO should be regarded as neither up-regulating nor down-regulating the DM-dependent release of CLIP, but as a modulator of peptide editing, determining the presenting cell type specific peptide profile able to retain stability in the class II groove.