Rheumatoid arthritis, an autoimmune disease, is significantly associated with the HLA class II allele HLA-DR4. While the etiology of rheumatoid arthritis remains unknown, type II collagen (CII) is a candidate autoantigen. An immunodominant pathogenic epitope from this autoantigen, CII(261-273), which binds to HLA-DR4 and activates CD4+ T cells, has been identified. The non-classical class II antigen, HLA-DM, is also a key component of class II antigen presentation pathways influencing peptide presentation by HLA-DR molecules expressed on professional antigen-presenting cells (APC). Here, we investigated whether the HLA-DR4-restricted presentation of the pathogenic CII(261-273) epitope was regulated by HLA-DM expression in APC. We show that APC lacking HLA-DM efficiently display the CII(261-273) peptide/epitope to activate CD4+ T cells, and that presentation of this peptide is modulated dependent on the level of HLA-DM expression in APC. Mechanistic studies demonstrated that the CII(261-273) peptide is internalized by APC and edited by HLA-DM molecules in the recycling pathway, inhibiting peptide presentation and T cell recognition. These findings suggest that HLA-DM expression in APC controls class II-mediated CII(261-273) peptide/epitope presentation and regulates CD4+ T cell responses to this self epitope, thus potentially influencing CII-dependent autoimmunity.