The HLA-DM genes encode an unconventional HLA (human leukocyte antigen) class II molecule that is required for appropriate binding of peptide to classical HLA class II products. In the absence of DM, other class II molecules are unstable upon electrophoresis in sodium dodecyl sulfate and are largely associated with a nested set of peptides derived from the invariant chain called CLIP, for class II-associated invariant chain peptides. DMA and DMB associated and accumulated in multilaminar, intracellular compartments with classical class II molecules, but were found infrequently, if at all, at the cell surface. Thus, DM may facilitate peptide binding to class II molecules within these intracellular compartments.