LPS stimulation of B lymphocytes induces germline transcription of and subsequent switching to the gamma 2b gene. Mature germline transcripts contain an I exon (non-coding) spliced to the C gamma 2b exons. To investigate the role of germline transcription and/or transcripts in heavy chain class switching, we have replaced the germline I gamma 2b promoter and I exon in ES cells with an expressed neomycin resistance gene. The mutated chromosome retains the downstream target sequence for switch recombination (S regions) and all sequences necessary for expression of a switched gamma 2b gene. Wild-type or mutant ES cells were injected into RAG-2 deficient blastocysts to generate somatic chimeras in which all lymphocytes were ES-cell derived. Chimeras derived from injection of heterozygous mutant ES cells had normal levels of serum IgG2b, but their splenic B cells showed a partial decrease in ability to switch to gamma 2b. Strikingly, B lymphocytes from chimeras derived by injection of homozygous mutant ES cells were deficient in IgG2b production both in vivo and in vitro, but normal with respect to production of other Ig heavy chain isotypes. Additional studies demonstrated that lack of ability to produce IgG2b by the mutant B cells correlated with lack of germline transcription and resulted from a specific defect in class-switch recombination to S gamma 2b. Together, these studies demonstrate that the I region is an important regulatory element for control of class-switch recombination.