In vitro studies with Abelson murine leukemia virus (AMuLV)-transformed murine pre-B cell lines demonstrated that wild-type mu but not mutant mu chains lacking the first constant domain (mu delta 1) can efficiently induce Ig light (L) chain gene rearrangement. Using antibodies against the cytoplasmic tail of the immunoglobulin co-receptor beta (Ig beta) chain we find mu, but not mu delta 1 chains associated with Ig beta. Since a heterodimer of surface-labeled proteins was co-precipitated with mu we conclude that only wild-type mu is associated with the Ig alpha/Ig beta co-receptor on the surface of pre-B cell lines. Mutant mu delta 1 chains achieve their surface expression by utilizing a glycophospholipid anchor. In vivo analysis of transgenic mice expressing either mu or mu delta 1 transgenes revealed the expected "normal" B cell development in the case of wild-type mu transgenic lymphocytes, but a block in differentiation of mu delta 1 transgenic lymphocytes. The maturation block occurs at the developmental transition of pre-B lymphocytes from the CD43/S7+, CD45R/B220low stage to the CD43/S7-, B220low/high stage in which the majority of L chain gene rearrangements occur. These results, together with the observed inability of the mu delta 1 chains to signal activation of L chain gene joining and to associate Ig alpha/Ig beta in pre-B cell lines suggests that signals mediated by the protein complex composed to mu/Ig alpha/Ig beta are crucial during differentiation of pre-B lymphocytes.