The pathogenesis of diabetes in the nonobese diabetic (NOD) mouse is characterized by a selective destruction of the insulin-producing beta-cells in the islets of Langerhans mediated by autoreactive T cells. The function of T cells is controlled by dendritic cells (DC), which are not only the most potent activators of naïve T cells, but also contribute significantly to the establishment of central and peripheral tolerance. In this study, we demonstrate that the NOD mouse (H2: K(d), Ag(7), E*, D(b)) shows selective phenotypic and functional abnormalities in DC derived from bone marrow progeny cells in response to GM-CSF (DC(NOD)). NOD DC, in contrast to CBA DC, have very low levels of intracellular I-A molecules and cell surface expression of MHC class II, CD80, CD86 and CD40 but normal beta 2-microglobulin expression. Incubation with the strong inflammatory stimulus of LPS and IFN-gamma does not increase class II MHC, CD80 or CD86, but upregulates the level of CD40. The genetic defect observed in the DC(NOD) does not map to the MHC, because the DC from the MHC congenic NOD.H2(h4) mouse (H2: K(k), A(k), E(k), D(k)) shares the cell surface phenotype of the DC(NOD). DC from these NOD.H2(h4) also fail to present HEL or the appropriate HEL-peptide to an antigen-specific T cell hybridoma. However all the DC irrespective of origin were able to produce TNF-alpha, IL-6, low levels of IL-12(p70) and NO in response to LPS plus IFN-gamma. A gene or genes specific to the NOD strain, but outside the MHC region, therefore must regulate the differentiation of DC in response to GM-CSF. This defect may contribute to the complex genetic aetiology of the multifactorial autoimmune phenotype of the NOD strain.