Transgenic mice have been used for analyses of cis-acting elements which are involved in the tissue-specific and developmental-specific expression, for analyses of physiological function of genes, or for the production of a human disease model. This approach is especially successful in the fields of immunology and oncology. Several years ago it was shown that the major histocompatibility complex (MHC) class II gene is identical to the immune response gene by demonstrating that the immune response can be restored by the new expression of class II molecules on immunocompetent cells. Recent evidence suggests that the class II molecule is involved in the generation of autoimmune disease, such as insulin-dependent diabetes mellitus (IDDM). The NOD (non-obese diabetic) mouse is shown to be a mouse model for human IDDM. Concerning the class II genes, the NOD mouse has two characteristic features, the lack of I-E and the presence of unique I-A. It is discussed how the role of class II molecules in the development of IDDM in the NOD mouse can be analyzed. In addition, the transgenic technique can be applied to the study of differentiation and oncogenesis of lymphoid cells. Factors or molecules that affect these processes will also be discussed.