Binds peptides derived from antigens that access the endocytic route of antigen presenting cells (APC) and presents them on the cell surface for recognition by the CD4 T-cells. The peptide binding cleft accommodates peptides of 10-30 residues. The peptides presented by MHC class II molecules are generated mostly by degradation of proteins that access the endocytic route; where they are processed by lysosomal proteases and other hydrolases. Exogenous antigens that have been endocytosed by the APC are thus readily available for presentation via MHC II molecules; and for this reason this antigen presentation pathway is usually referred to as exogenous. As membrane proteins on their way to degradation in lysosomes as part of their normal turn-over are also contained in the endosomal/lysosomal compartments; exogenous antigens must compete with those derived from endogenous components. Autophagy is also a source of endogenous peptides; autophagosomes constitutively fuse with MHC class II loading compartments. In addition to APCs; other cells of the gastrointestinal tract; such as epithelial cells; express MHC class II molecules and CD74 and act as APCs; which is an unusual trait of the GI tract. To produce a MHC class II molecule that presents an antigen; three MHC class II molecules (heterodimers of an alpha and a beta chain) associate with a CD74 trimer in the ER to form a heterononamer. Soon after the entry of this complex into the endosomal/lysosomal system where antigen processing occurs; CD74 undergoes a sequential degradation by various proteases; including CTSS and CTSL; leaving a small fragment termed CLIP (class-II-associated invariant chain peptide). The removal of CLIP is facilitated by HLA-DM via direct binding to the alpha-beta-CLIP complex so that CLIP is released. HLA-DM stabilizes MHC class II molecules until primary high affinity antigenic peptides are bound. The MHC II molecule bound to a peptide is then transported to the cell membrane surface. In B-cells; the interaction between HLA-DM and MHC class II molecules is regulated by HLA-DO. Primary dendritic cells (DCs) also to express HLA-DO. Lysosomal microenvironment has been implicated in the regulation of antigen loading into MHC II molecules; increased acidification produces increased proteolysis and efficient peptide loading.