Mammalian class II major histocompatibility (MHCII) proteins bind peptide antigens in endosomal compartments of antigen-presenting cells. The nonclassical MHCII protein HLA-DM chaperones peptide-free MHCII, protecting it against inactivation, and catalyzes peptide exchange on loaded MHCII. Another nonclassical MHCII protein, HLA-DO, binds HLA-DM and influences the repertoire of peptides presented by MHCII proteins. However, the mechanism by which HLA-DO functions is unclear. Here we have used X-ray crystallography, enzyme kinetics and mutagenesis approaches to investigate human HLA-DO structure and function. In complex with HLA-DM, HLA-DO adopts a classical MHCII structure, with alterations near the α subunit's 3₁₀ helix. HLA-DO binds to HLA-DM at the same sites implicated in MHCII interaction, and kinetic analysis showed that HLA-DO acts as a competitive inhibitor. These results show that HLA-DO inhibits HLA-DM function by acting as a substrate mimic, and the findings also limit the possible functional roles for HLA-DO in antigen presentation.