An endogenously produced immunoglobulin light chain (lambda 2(315] is processed and presented to T cells in association with major histocompatibility complex (MHC) class II molecules. Using transfectants producing variant forms of lambda 2(315) that are neither expressed on the cell surface nor secreted, we demonstrate that intracellular lambda 2(315), which has never been exported outside of the cell, is the source of processed lambda 2(315) idiotype. This challenges the currently accepted paradigm that endogenous antigens are only presented by MHC class I molecules. Variants of lambda 2(315) protein that are retained in the endoplasmic recticulum (ER) are also presented. Variants that are expressed in the cytosol as well as those that are transported into the nucleus rather than the ER are not presented. Thus, the ER is likely to be the processing compartment.