Major histocompatibility complex (MHC) class II molecules can present peptides derived from two different sources. The predominant source of peptide in uninfected antigen presenting cells (APCs) is from self-proteins that are synthesized within the cell and traffic through the MHC class II compartment. The other source of antigen is endocytosed proteins, which includes both self- and foreign proteins. Foreign protein antigens generate adaptive immune responses, whereas self-peptides stabilize the MHC class II heterodimer on the cell surface, allowing positive and negative selection of thymocytes. Therefore, self-antigens play an important normal role in shaping the T cell receptor repertoire as well as a pathological role in autoimmunity. To determine whether processing and presentation of self-antigens by MHC class II molecules differs depending on whether the antigen is supplied through synthesis within the cell or by endocytosis, we used a T cell clone against an Eα peptide presented by I-A^b to show that processing through these two routes can differ. We also show that mice can be tolerant to the epitope formed through the endogenous route, but responsive to the epitope that can be formed through endocytosis. This suggests that negative selection occurs primarily against antigens that are synthesized within the APC, and that endocytosed self-antigens could serve as autoantigens. Finally, we also demonstrate that lipopolysaccharide-activated B cells are defective for uptake, processing, and presentation of this self-antigen, and that this correlates with the increased expression of the costimulatory molecules B7.1 and B7.2. This may provide a model for studying the onset of an autoimmune response.