The MHC is an essential contributor to autoimmunity. Lmp2 and Tap1 are genes located in the MHC class II region, and they encode proteins participating in the generation and transport of endogenous peptides for T cell education. A mutation (T-->A) has now been detected in the shared bidirectional promoter of the Lmp2 and Tap1 genes in the nonobese diabetic (NOD) mouse. The nucleotide substitution (TCATTC-->TCAATC) in NOD mice eliminates an initiator (Inr) element (TCATTC) thought to be important for RNA polymerase II positioning in the Lmp2 orientation. It also created a CAAT-like box and an inverted CAAT-like box in the Lmp2 and Tap1 orientations, respectively. Northern blot revealed reduced amounts of Tap1 and Lmp2 mRNA in NOD mice, and 5'-rapid amplification of cDNA ends revealed the loss of a transcription start site of Lmp2 in these animals. The Tap1-Lmp2 promoter from NOD mice showed reduced transcriptional activity in transient transfection assays with luciferase reporter constructs for both Tap1 and Lmp2 genes. Observed altered substrate specificity of Lmp2 containing proteasomes isolated from NOD mice was consistent with reduced Lmp2 activity. The beneficial influence of non-MHC genes (NOR mice) and gender factors (male NOD mice) influencing the penetrance of the promoter polymorphism further confirmed the essential gender and hormonal context of the mutation. This study identifies the first specific mutation in the MHC of the NOD mouse that specifically impacts the activity of genes involved in peptide presentation, a process essential for T cell education.