Our understanding of how an autoantigen is processed and presented during the development of a major histocompatibility complex (MHC) class II-dependent and T-cell-mediated autoimmune disease, such as IDDM, is incompletely understood. We have used insulin as a model autoantigen in IDDM to address the question of whether MHC class II molecules play a role in the generation and/or preservation of an autoantigen peptide that stimulates T-cell activation. Analyses of the requirement of I-Ad class II molecules in the processing of the partially processed porcine insulin peptide A1-A14/B1-B16 demonstrate that the binding of this peptide to I-Ad is essential for it to be further processed and tailored into a T-cell epitope. Based on our observations, we propose a two-step model for insulin processing in which insulin is first processed by an enzyme(s) into an intermediate peptide that binds to class II and then class II functions as a template to guide the processing of this partially processed peptide by cathepsin D into a T-cell epitope. Our data further underscore the important realization that MHC class II-directed processing of an autoantigen (e.g., insulin) may regulate 1) the relative immunodominance of T-cell determinants in an autoantigen, 2) the self-reactivity to cryptic T-cell epitopes in autoantigens, and 3) the susceptibility to autoimmune disease.