Roles of the kappa intronic enhancer (iE kappa) and its associated matrix attachment region (MAR) during B cell development were examined using mutant embryonic stem (ES) cell lines in which the entire region on both chromosomes was replaced with either a recombined LoxP site (E kappa ND) or the PGK-neomycin resistance (PGK-neo(r)) gene (E kappa NI). B cells derived from E kappa ND ES cells had greatly impaired V kappa J kappa rearrangement, normal levels of kappa expression, and kappa:lambda ratios of 1:1 instead of the usual 10:1. Furthermore, lambda-producing hybridomas derived from E kappa ND cells displayed little kappa rearrangement. Thus, the MAR and iE kappa are quantitatively significant for kappa rearrangement but not necessary. In addition, little V kappa J kappa rearrangement could be detected in B cells derived from E kappa NI ES cells, demonstrating that an inserted PGK-neo(r) gene dominantly suppresses V kappa J kappa rearrangement.