To study the influence of immunoglobulin heavy-chain (HC) and light-chain (LC) expression in promoting B-cell differentiation, we have introduced functional immunoglobulin HC and/or LC transgenes into the recombinase activating gene-2-deficient background (RAG-2-/-). RAG-2-/- mice do not undergo endogenous V(D)J rearrangement events and, therefore, are blocked in B- and T-cell development at the early pro-B- and pro-T-cell stages. Introduction of immunoglobulin HC transgenes into the RAG-2-/- background promotes the development of a B-lineage cell population that phenotypically has the characteristics of pre-B cells. We have shown further that this population has altered growth characteristics as measured by interleukin-7 responsiveness in culture. Bone marrow cells from immunoglobulin HC transgenic RAG-2-/- mice have up-regulated expression of germ-line kappa LC gene transcripts and down-regulated expression of lambda 5 surrogate LCs (SLCs). Although mu HC/SLC complexes are detectable intracellularly in HC/RAG-2-/- pre-B-cell populations, HC expression is not readily detectable on the surface of these cells. lambda LC RAG-2-/- mice had a bone marrow B-lineage cell phenotype indistinguishable from that of RAG-2-/- littermates, indicating that LC expression by itself has no influence on pro-B cell differentiation. Strikingly, simultaneous introduction of mu HC and lambda LC transgenes into RAG-2-/- mice led to the generation of a substantial population of "monoclonal" peripheral B-cells that were functional with regard to immunoglobulin secretion, indicating that T cells or diverse immunoglobulin repertoires are not necessary for peripheral B-cell development.