Peptide loading by major histocompatibility complex (MHC) class II molecules occurs in the endocytic pathway and is critically dependent upon the function of the class II-related molecule human leucocyte antigen-DM (HLA-DM). We have previously shown that a tyrosine-based lysosomal targeting signal present in the cytoplasmic tail of DMB has the capacity to target HLA-DM to peptide-loading compartments in HeLa cells. Here we investigate the importance of this signal in directing HLA-DM to processing compartments in professional antigen-presenting cells. We reconstituted a DMB-negative B-lymphoblastoid cell line with native or targetingdeficient DMB and show that in the absence of its tyrosine signal, DMB-Y230A is as efficient as the wild-type molecule in inducing MHC class II SDS stable dimer formation; restoring expression of the conformation-dependent DR3 epitope 16:23; the removal of CLIP; and accessing lysosomal peptide-loading compartments. By transient transfection in HeLa cells we show that Ii is able to compensate for loss of DMB-encoded targeting information. These data imply that in cells expressing physiological levels of class II, Ii and DM, there is sufficient association with Ii to direct the majority of DM into the endocytic pathway. Thus MHC class II and HLA-DM may follow similar intracellular trafficking pathways on route to antigen-processing compartments.