The invariant chain, which associates with the major histocompatibility complex (MHC) class II molecules in the endoplasmic reticulum, serves two functions important in antigen processing. First, it prevents class II molecules from binding peptides in the early stages of intracellular transport. Second, it contains a cytoplasmic signal that targets the class II-invariant chain complex to an acidic endosomal compartment. Proteolytic cleavage and subsequent dissociation of the invariant chain then occurs, allowing peptides derived from endocytosed proteins to bind to released class II molecules before their expression at the cell surface. Certain human cell lines that are mutant in one or more MHC-linked genes are defective in class II-restricted antigen processing. Here we show that in transfectants of one of these cell lines, T2, this deficiency results in the association of a large proportion of class II molecules with a nested set of invariant-chain-derived peptides (class II-associated invariant chain peptides, or CLIP). HLA-DR3 molecules isolated from T2 transfectants can be efficiently loaded with antigenic peptides by exposure to a low pH in vitro, perhaps reflecting the in vivo conditions in which peptides associate with class II molecules. Addition of synthetic CLIP inhibits the loading process, indicating that CLIP may define the region of the invariant chain responsible for obstructing the class II binding site.