We have evaluated the relative contributions of the extracellular and cytoplasmic domains of MHC class II molecules in determining the Ag-processing requirements for class II-restricted Ag presentation to T cells. Hybrid genes were constructed to encode a heterodimeric I-Ak molecule in which the extracellular portion of the molecule resembled wild type I-Ak but where the connecting stalk, transmembrane and cytoplasmic domains of both the alpha- and beta-chain were derived from the class I molecule H-2Dd. Mutant I-Ak molecules were expressed as heterodimeric membrane glycoproteins reactive with mAb specific for wild type I-Ak. Fibroblast and B lymphoma cells expressing either wild type or mutant I-Ak molecules were able to process and present hen egg lysozyme (HEL) and conalbumin to Ag-specific, I-Ak-restricted, T cell hybridomas or clones. The mutant-expressing cells presented native and peptide Ag less efficiently than the wild type-expressing cells, suggesting that the disparity in presentation efficiency was not due to a difference in Ag processing. CD4 interaction was intact on the mutant I-Ak molecules. Presentation of native Ag by mutant and wild type-I-Ak-expressing cells was abolished by preincubation with chloroquine, or after paraformaldehyde fixation. After transfection of a cDNA encoding the gene for HEL, neither mutant nor wild type-I-Ak-expressing cells presented endogenously synthesized HEL to a specific T hybrid. Newly synthesized mutant I-Ak molecules were associated with invariant chain. These data demonstrate the ability of hybrid class II molecules to associate intracellularly with invariant chain and degraded foreign Ag in a conventional class II-restricted processing pathway indicating that the extracellular domains of class II molecules play a dominant role in controlling these Ag-processing requirements.