The pathogenesis of diabetes in the nonobese diabetic (NOD) mouse is characterized by a selective destruction of the insulin-producing β-cells in the islets of Langerhans mediated by autoreactive T cells. The function of T cells is controlled by dendritic cells (DC), which are not only the most potent activators of naïve T cells, but also contribute significantly to the establishment of central and peripheral tolerance. In this study, we demonstrate that the NOD mouse (H2: K^d, A^g7, E°, D^b) shows selective phenotypic and functional abnormalities in DC derived from bone marrow progeny cells in response to GM-CSF (DC^NOD). NOD DC, in contrast to CBA DC, have very low levels of intracellular I-A molecules and cell surface expression of MHC class II, CD80, CD86 and CD40 but normal β2-microglobulin expression. Incubation with the strong inflammatory stimulus of LPS and IFN-γ does not increase class II MHC, CD80 or CD86, but upregulates the level of CD40. The genetic defect observed in the DC^NOD does not map to the MHC, because the DC from the MHC congenic NOD.H2^h4 mouse (H2: K^k, A^k, E^k, D^k) shares the cell surface phenotype of the DC^NOD. DC from these NOD.H2^h4 also fail to present HEL or the appropriate HEL-peptide to an antigen-specific T cell hybridoma. However all the DC irrespective of origin were able to produce TNF-α, IL-6, low levels of IL-12(p70) and NO in response to LPS plus IFN-γ. A gene or genes specific to the NOD strain, but outside the MHC region, therefore must regulate the differentiation of DC in response to GM-CSF. This defect may contribute to the complex genetic aetiology of the multifactorial autoimmune phenotype of the NOD strain.