The MHC class II-like molecule HLA-DM (DM)(H-2M in mice) catalyzes the exchange of CLIP for antigenic peptides in the endosomes of APCs. HLA-DO (DO)(H-2O in mice) is another class II-like molecule that is expressed in B cells, but not in other APCs. Studies have shown that DO impairs or modifies the peptide exchange activity of DM. To further evaluate the role of DO in Ag processing and presentation, we generated transgenic mice that expressed the human HLA-DOA and HLA-DOB genes under the control of a dendritic cell (DC)-specific promoter. Our analyses of DCs from these mice showed that as DO levels increased, cell surface levels of A b-CLIP also increased while class II-peptide levels decreased. The presentation of some, but not all, exogenous Ags to T cells or T hybridomas was significantly inhibited by DO. Surprisingly, H-2M accumulated in DO-expressing DCs and B cells, suggesting that H-2O/DO prolongs the half-life of H-2M. Overall, our studies showed that DO expression impaired H-2M function, resulting in Ag-specific down-modulation of class II Ag processing and presentation.