CD23(+)CD21(high)CD1d(high) B cells in inflamed nodes (Bin cells) accumulate in the lymph nodes (LNs) draining inflamed joints of the TNF-α-transgenic mouse model of rheumatoid arthritis and are primarily involved in the significant histological and functional LN alterations that accompany disease exacerbation in this strain. In this study, we investigate the origin and function of Bin cells. We show that adoptively transferred GFP(+) sorted mature follicular B (FoB) cells home preferentially to inflamed LNs of TNF-α-transgenic mice where they rapidly differentiate into Bin cells, with a close correlation with the endogenous Bin fraction. Bin cells are also induced in wild-type LNs after immunization with T-dependent Ags and display a germinal center phenotype at higher rates compared with FoB cells. Furthermore, we show that Bin cells can capture and process Ag-immune complexes in a CD21-dependent manner more efficiently than can FoB cells, and they express greater levels of MHC class II and costimulatory Ags CD80 and CD86. We propose that Bin cells are a previously unrecognized inflammation-induced B cell population with increased Ag capture and activation potential, which may facilitate normal immune responses but may contribute to autoimmunity when chronic inflammation causes their accumulation and persistence in affected LNs.