In Ag-presenting cells, MHC class II molecules bind antigenic peptides in endocytic compartments and transport them to the cell surface for presentation to CD4(+) T cells. Newly synthesized class II alpha beta heterodimers associate with a third polypeptide, invariant chain (li), in the endoplasmic reticulum. This association may prevent class II molecules from binding peptides until they are transported to endocytic compartments where li is proteolyzed. Signals in the li cytosolic tail are believed to be responsible for the targeting of class II-li complexes to endocytic compartments, but it is unclear whether this targeting event occurs at the trans face of the Golgi or at the plasma membrane. In this report, we address whether the endosomal localization signal in the li cytosolic tail can be functionally substituted with a tyrosine-based signal for rapid internalization from the cell surface. A chimeric protein was generated in which the li cytosolic tail was replaced in its entirety with the cytosolic tail from transferrin receptor. In cells expressing this chimeric form of li, newly synthesized class II-li complexes travel rapidly to the cell surface and are internalized efficiently, but li proteolysis is delayed and class II Ag presentation is inhibited. These results suggest that targeting class II-li complexes to early/recycling endosomes from the cell surface does not in itself lead to li proteolysis; subsequent delivery to later endosomes may be required. The data suggest that signals for this targeting event may lie in residues 18 to 29 of the li cytosolic tail.