HLA-DM stabilizes peptide-receptive class II alphabeta dimers and facilitates the capture of high affinity peptides, thus influencing the peptide repertoire presented by class II molecules. Variations in DM levels may therefore have a profound effect on the antigenic focus of T cell-mediated immune responses. Specifically, DM expression may influence susceptibility and resistance to autoimmune diseases. In this study the role of DM in HLA-DR4-restricted presentation of an insulin-dependent diabetes mellitus autoantigen, glutamate decarboxylase (GAD), was tested. Presentation of immunodominant GAD epitope 273-285 was regulated by endogenous DM levels in human B lymphoblasts. T cell responses to exogenous GAD as well as an endogenous cytoplasmic form of this Ag were significantly diminished with increasing cellular expression of DM. Epitope editing by DM was observed only using Ag and not small synthetic peptides, suggesting that this process occurred within endosomes. Results with cytoplasmic GAD also indicated that peptides from this compartment intersect class II proteins in endocytic vesicles where DM editing was facilitated. Changes in DM levels within APC may therefore influence the presentation of autoantigens and the development of autoimmune disorders such as type I diabetes.