To analyse mechanisms of Immunological self-tolerance, a detailed comparison of the development and fate of lysozyme-speclflc B lymphocytes was carried out In transgenic mice expressing rearranged antl-lysozyme IgM/lgD Ig transgenes in the absence or presence of an additional transgene encoding lysozyme itself. In the absence of lysozyme, B cell development, localization, and differential expression of transgene-encoded IgM and IgD occurred In the normal sequence in Ig transgenic mice, establishing that these animals provide a physiological model for studies of B cell selection in vivo. By contrast, In lysozyme-expressing double-transgenic mice, tolerant lysozyme-reactive B cells persisted within the follicular mantle zones in the spleen, lymph nodes, and Peyer's patches, but were eliminated from the splenic marginal zones. It could be shown that lysozyme-blnding and induction of tolerance occurred as soon as surface Ig was expressed on immature B cells in the bone marrow of the double-transgenic mice although this did not prevent maturation, emigration from the bone marrow, and localization In peripheral lymphoid follicles. These findings, together with recent examples of aborted maturation of self-reactive B cells, indicate two functionally distinct antigen receptor signalling events in immature B cells and suggest a unique role for the follicular mlcroenvironment.