A novel cDNA, IA-2beta, was isolated from a mouse neonatal brain library. The predicted protein sequence revealed an extracellular domain, a transmembrane region, and an intracellular domain. The intracellular domain is 376 amino acids long and 74% identical to the intracellular domain of IA-2, a major autoantigen in insulin-dependent diabetes mellitus (IDDM). A partial sequence of the extracellular domain of IA-2beta indicates that it differs substantially (only 26% identical) from that of IA-2. Both molecules are expressed in islets and brain tissue. Forty-six percent (23 of 50) of the IDDM sera but none of the sera from normal controls (0 of 50) immunoprecipitated the intracellular domain of IA-2beta. Competitive inhibition experiments showed that IDDM sera have autoantibodies that recognize both common and distinct determinants on IA-2 and IA-2beta. Many IDDM sera are known to immunoprecipitate 37-kDa and 40-kDa tryptic fragments from islet cells, but the identity of the precursor protein(s) has remained elusive. The current study shows that treatment of recombinant IA-2beta and IA-2 with trypsin yields a 37-kDa fragment and a 40-kDa fragment, respectively, and that these fragments can be immunoprecipitated with diabetic sera. Absorption of diabetic sera with unlabeled recombinant IA-2 or IA-2beta, prior to incubation with radiolabeled 37-kDa and 40-kDa tryptic fragments derived from insulinoma or glucagonoma cells, blocks the immunoprecipitation of both of these radiolabeled tryptic fragments. We conclude that IA-2beta and IA-2 are the precursors of the 37-kDa and 40-kDa islet cell autoantigens, respectively, and that both IA-2 and IA-2beta are major autoantigens in IDDM.