Ileal Peyer's patches (IPPs) in the sheep are composed of tightly packed follicles in which surface IgM-positive B cells proliferate and can be exported to the periphery. We report that the light chain rearrangement pattern in a single IPP follicle is much more restricted than in the entire tissue, which indicates that, as in the chicken bursa, ongoing rearrangement does not take place in this organ. Moreover, we show that B cells extensively diversify their antigen receptor while proliferating in IPP follicles. Sequencing of part of the V lambda locus indicates that this diversification is not achieved by gene conversion, but rather by untemplated somatic mutation and intense selective pressure. These results strongly imply that sheep IPPs behave as a bursa-equivalent, primary lymphoid organ of diversification and that somatic point hypermutation, which is known to proceed during secondary immune responses, can also generate an antibody repertoire.