MHC class II molecules are found on the basolateral plasma membrane domain of polarized epithelial cells, where they can present Ag to intraepithelial lymphocytes in the vascular space. We have analyzed the sorting information required for efficient intracellular localization and polarized distribution of MHC class II molecules in stably transfected Madin-Darby canine kidney cells. These cells were able to present influenza virus particles to HLA-DR1-restricted T cell clones. Wild-type MHC class II molecules were located on the basolateral plasma membrane domain, in basolateral early endosomes, and in late multivesicular endosomes, the latter also containing the MHC class II-associated invariant chain and an HLA-DM fusion protein. A phenylalanine-leucine residue within the cytoplasmic tail of the beta-chain was required for basolateral distribution, efficient internalization, and localization of the MHC class II molecules to basolateral early endosomes. However, distribution to apically located, late multivesicular endosomes did not depend on signals in the class II cytoplasmic tails as both wild-type class II molecules and mutant molecules lacking the phenylalanine-leucine motif were found in these compartments. Our results demonstrate that sorting information in the tails of class II dimers is an absolute requirement for their basolateral surface distribution and intracellular localization.