Major histocompatibility complex (MHC) restriction of the immune response is established during positive selection of T cells in the thymus. This occurs mainly through interactions of T cell receptor of developing thymocytes with MHC/peptide ligands on cortical thymic epithelial cells (TEC). An ongoing controversy concerns the origin and the role of peptides involved in the positive selection of thymocytes. Evidence provided here shows that processing of MHC class II complexes in cortical TEC differs from that of medullary TEC. Removal of the invariant chain associated with MHC class II complexes was rapid and complete in medullary TEC which present peptides from both exogenous and cytosolic origin. In cortical TEC, a large fraction of class II dimers remained associated with a 10-12-kDa fragment of invariant chain (Ii). Incomplete removal of Ii correlated with the inability of cortical TEC to present peptides from exogenous origin. However, presentation of peptides from cytosolic proteins by cortical TEC remained possible. Thus, most peptides from exogenous proteins may be excluded from participating in positive selection of CD4+ T cells by a mechanism limiting Ii breakdown.