Pax5 activity is enhanced in activated B cells and is essential for class switch recombination (CSR). We show that inhibitor of differentiation (Id)2 suppresses CSR by repressing the gene expression of activation-induced cytidine deaminase (AID), which has been shown to be indispensable for CSR. Furthermore, a putative regulatory region of AID contains E2A- and Pax5-binding sites, and the latter site is indispensable for AID gene expression. Moreover, the DNA-binding activity of Pax5 is decreased in Id2-overexpressing B cells and enhanced in Id2(-/-) B cells. The kinetics of Pax5, but not E2A, occupancy to AID locus is the same as AID expression in primary B cells. Finally, enforced expression of Pax5 induces AID transcription in pro-B cell lines. Our results provide evidence that the balance between Pax5 and Id2 activities has a key role in AID gene expression.