We have generated transgenic mice that express the immunoglobulin (Ig)M heavy chain and kappa light chain genes coding for a human IgM rheumatoid factor (RF), Les. Transgenic B cells expressing human IgM RF show striking similarities to their counterparts in normal humans. They comprise a significant proportion of the adult B cell population, but secrete only low levels of RF into the serum. The RF transgene-expressing B cells localize to primary B cell follicles and the mantle zone regions of secondary follicles in the spleen. Using these mice we have been able to show that one of the central functions of normal RF-expressing B cells may be to act as highly efficient antigen-presenting cells for low concentrations of immune-complexed antigen. High levels of secretion of IgM RF can not be induced under normal circumstances, although RF-expressing B cells proliferate well in vitro to both aggregated human IgG and anti-human IgM antibodies. However, these mice are not intrinsically secretion deficient. By crossing the RF transgenic mice with the autoimmune MRL/lpr background, we find a dramatic increase, > 200-fold, in levels of serum RF. The results strongly suggest that a major function of normal resting RF B cells is unrelated to antibody secretion. Rather, the RF B cells in the follicles may play a role in antigen presentation and regulation of immune responses to antibody-bound nonself-, and possibly self-antigens. This physiologic role of RF B cells may be disrupted in RF-associated autoimmune disease.