The MHC class II-associated invariant chain interacts in trimeric form with class II molecules, inhibits peptide binding, and mediates targeting of class II molecules to endosomal compartments. To dissect the different functions of the invariant (Ii) chain, a set of cDNAs, encoding truncated forms of the Ii chain, was constructed. mRNAs, transcribed from these cDNAs were translated in vitro, together with mRNAs encoding class II HLA DR1 alpha and beta subunits. An Ii chain truncation that contains the 104 NH2-terminal amino acids was able to associate with class II molecules. This construct contains the region from which class II-associated Ii chain peptides (CLIP, amino acids 81-104) are derived. The absence of a further eight residues at the COOH terminus results in a construct of 96 amino acids that is unable to associate with class II molecules. Association of the truncated Ii chains with class II molecules showed a strict correlation with inhibition of peptide binding. Removal of the NH2-terminal cytoplasmic tail and transmembrane region of Ii chain and its replacement with a cleavable signal sequence led to aberrant folding and impaired association with class II molecules. The region between amino acids 163 and 183 was found to be essential for visualization of Ii chain homotrimers by covalent cross-linking.