Fc gamma receptors (Fc gamma RII) on B lymphocytes negatively regulate B cell receptor (BCR)-dependent activation upon cross-linking of the two receptors. The mechanism reflects the ability of the Fc gamma RII cytoplasmic tail to recruit specific phosphatases that inactivate elements of the BCR-signaling cascade. We now show that cross-linking also blocks the processing and presentation of BCR-bound Ag. This occurs because the Fc gamma RII isoform typically expressed by B cells (Fc gamma RII-B1) is incompetent for endocytosis. When cross-linked, Fc gamma RII-B1 acts as a dominant negative inhibitor of BCR endocytosis. In contrast, cross-linking of endocytosis-competent Fc gamma RII isoforms did not inhibit endocytosis or processing of BCR-bound Ag. Thus, Fc gamma RII-B1 acts not only to prevent B cell activation under conditions of Ab excess, but also to prevent clonotypic T cell activation by inhibiting the ability of B cells to generate specific MHC class II-bound TCR ligands.