B cell-deficient nonobese diabetic (NOD) mice are protected from the development of spontaneous autoimmune diabetes, suggesting a requisite role for Ag presentation by B lymphocytes for the activation of a diabetogenic T cell repertoire. This study specifically examines the importance of B cell-mediated MHC class II Ag presentation as a regulator of peripheral T cell tolerance to islet beta cells. We describe the construction of NOD mice with an I-Ag7 deficiency confined to the B cell compartment. Analysis of these mice, termed NOD BCIID, revealed the presence of functionally competent non-B cell APCs (macrophages/dendritic cells) with normal I-Ag7 expression and capable of activating Ag-reactive T cells. In addition, the secondary lymphoid organs of these mice harbored phenotypically normal CD4+ and CD8+ T cell compartments. Interestingly, whereas control NOD mice harboring I-Ag7-sufficient B cells developed diabetes spontaneously, NOD BCIID mice were resistant to the development of autoimmune diabetes. Despite their diabetes resistance, histologic examination of pancreata from NOD BCIID mice revealed foci of noninvasive peri-insulitis that could be intentionally converted into a destructive process upon treatment with cyclophosphamide. We conclude that I-Ag7-mediated Ag presentation by B cells serves to overcome a checkpoint in T cell tolerance to islet beta cells after their initial targeting has occurred. Overall, this work indicates that the full expression of the autoimmune potential of anti-islet T cells in NOD mice is intimately regulated by B cell-mediated MHC class II Ag presentation.