The membrane-bound form of immunoglobulin serves as an antigen-specific receptor for B cells mediating signal transduction and antigen presentation. We have developed an assay that reconstitutes both these physiologic responses with respect to the antigen phosphorylcholine. By introducing specific mutations in the human Ig mu chain gene, we have shown that certain transmembrane residues and the short cytoplasmic domain are crucial for these two activities. Moreover, elimination of a single transmembrane hydroxyl group severely inhibits antigen presentation without affecting signal transduction, suggesting that these two functions are mediated by different protein interactions.