3.L2 T cell receptor transgenic T cells are activated by the 64-76 peptide of the mouse hemoglobin d beta chain [Hb(64-76)], and their response is antagonized by the position 72 alanine substitution of this peptide (A72). To test the effect of this altered peptide ligand (APL) on 3.L2 T cell function in vivo, a transgene expressing A72 in major histocompatibility complex II positive cells (A72tg) has been introduced into mice. We demonstrate that 3.L2 T cells, when transferred to A72tg+ mice show a dramatically reduced proliferative response to Hb(64-76). Identical decreased responses were observed using T cells that developed in either A72tg+ or A72tg- hosts. This affect was not attributable to diminished precursor frequency, anergy, or competition for binding to I-Ek molecules. These results unequivocally demonstrate in vivo antagonism by an endogenous APL and characterize a class of self-peptides that, although inefficient in causing deletion in the thymus, effectively modulate T cell responses in the periphery.